According to the Zhitong Financial News app, JPMorgan Chase (JPM.US), the largest bank in the United States, released its third-quarter 2026 earnings report ahead of Tuesday’s U.S. market open, kicking off this earnings season. The quarter’s net profit was $15.305 billion.
$1.439 billion (compared to $1.439 billion in the same period last year), up 6%; diluted earnings per share (EPS) of $5.57, higher than $5.07 in the same period last year.
However, the year-over-year growth failed to mask two misses: revenue and adjusted earnings per share both fell below market expectations, and fixed income trading revenue declined year-over-year for the first time in over two years. Revenue increased 8% year-over-year to $50.9 billion, below market expectations. Non-GAAP earnings per share came in at $5.75, $0.19 lower than expected.
Stock and bond trading businesses are experiencing starkly contrasting fortunes
Quarterly Markets revenue was $10.3 billion, a 15% year-over-year increase, slightly below the analyst expectation of $10.5 billion. Breaking it down, the two trading segments moved in opposite directions. Stock trading revenue was $4.954 billion, up significantly year-over-year.
49%, the best third-quarter performance on record and exceeding expectations—the company attributes this to "strong performance across all product lines, particularly Prime and derivatives." Fixed income trading revenue: $53.66 million.
billion U.S. dollars, a 4% year-over-year decline—the first drop in over two years—and significantly below the market expectation of approximately $6 billion.
The decline in fixed income trading was the primary reason for the quarter's overall trading revenue falling short of expectations. The Federal Reserve's September rate hike to curb inflation caused the 10-year U.S. Treasury yield to rise to nearly 25% this month.
Highest level in years; rising yields will reduce the value of existing bonds and may also suppress customer trading demand.
Net interest income still lacks growth momentum, and investment banking momentum is slowing.
Investment banking fee income was $3.1 billion, up 15% year-over-year, broadly in line with expectations but down 8% quarter-over-quarter from the second quarter. M&A advisory fees exceeded expectations, while equity and bond underwriting fees were below expectations. Reuters cited
According to Dealogic data, JPMorgan Chase retained its position as the top investment banking revenue generator; the report highlighted debt capital markets (DCM) as a standout sector in the industry—large technology companies raising funds for AI
Related growth initiatives are financing through significant bond issuance.
Wall Street dealmakers started the year strong, with the most notable being the historic IPO of SpaceX, led by Elon Musk. But in recent weeks, rising bond yields and a slowdown in the IPO market have threatened what could have been a stellar year for investment banking.
CEO Jamie
Dimon stated in the statement that investment banking fees and market business revenues both saw growth in the "high teens percentage range," "driven by strong client activity, although activity slowed somewhat during the quarter." He mentioned last week in an interview that investment banking had
September saw a "slight slowdown." According to Bloomberg, both growth figures fell at the lower end of the range projected by the company at last month's industry meeting, when it anticipated growth in the mid-to-high teens for both metrics.
Net interest income (NII) was $27.1 billion, up 13% year-over-year and above market expectations; excluding market activities, it was $24.7 billion, up 6% year-over-year, driven primarily by higher deposit balances and increased credit card and wholesale loan balances, partially offset by lower interest rates.
On the cost side, another misstep this quarter: non-interest expenses amounted to $27.295 billion, up year-over-year
12%, with growth outpacing revenue and exceeding analyst expectations, attributed by the company to performance-based compensation, growth in front-line staff, increased brokerage and distribution expenses, marketing costs, and higher technology investments.
Capital: Signal of an 87% drop in buybacks
This quarter, the focus may not be on profits, but on capital allocation. JPMorgan Chase repurchased only $664 million in common stock this quarter, a sharp decline of approximately 87% from approximately $8.3 billion in the same period last year; the net dividend payout ratio over the past twelve months has fallen to
61% (previously close to 100%). The dividend remains at $1.65 per share.
JPMorgan's statement on this was straightforward: "We reduced share repurchases this quarter. We believe we can allocate this capital to shareholders with very attractive returns in the future." The market generally interpreted this as — in AI
Faced with arms races, technology investments, and pending acquisitions such as Apple Card, banks have chosen to retain capital rather than repurchase shares.
On a financial basis, the quarter recorded a net investment securities loss of $6.58 billion, which Dimon referred to in the statement as "discretionary" losses; excluding this item (pre-tax), adjusted net income was $15.8 billion and EPS
$5.75. Common equity tier 1 capital ratio (CET1, standard approach) at 13.9%, book value per share at $132.30, up 6% year-over-year.
Looking at business segments, all three main lines achieved year-over-year growth: Consumer and Community Banking (CCB) net revenue of $21.171 billion (+9%), net profit of $5.670
$1.2 billion (+13%); Corporate and Investment Banking (CIB) net revenue of $227.34 billion (+14%), net profit of $82.47 billion (+20%), driven by growth in banking and payment revenues
16%; Net revenue from Asset and Wealth Management (AWM) was $6.909 billion (+14%), with net profit of $1.843 billion (+11%), and assets under management (AUM) reached $520 billion.
$1 trillion, a 13% year-over-year increase, with net customer asset inflows of $263 billion. The enterprise segment reported a net loss of $455 million, primarily due to the aforementioned investment securities losses.
Three signals from the U.S. banking sector
As the largest bank in the United States, JPMorgan Chase typically sets the tone for earnings season. Its earnings report, along with that of Wells Fargo (WFC.US) released on the same day, sent three signals for the U.S. banking sector.
Signal 1: The "peak decline" in trading revenue has materialized. JPMorgan Chase's total trading revenue still increased year-over-year.
15%, but has significantly retreated from the record high in the second quarter. According to reports, analysts expect the combined equity and fixed income trading revenue of the five major U.S. investment banks (JPMorgan Chase, Goldman Sachs, Morgan Stanley, Citigroup, and Bank of America) in the third quarter to be approximately $380 million.
billion U.S. dollars, a noticeable decline from the record of approximately $47 billion in the second quarter, despite a year-over-year increase of about 13%. On the investment banking side, JPMorgan’s investment banking fees declined by 8% quarter-over-quarter, and Bank of America has warned that its investment banking fees may decline by approximately
10%, with clear differentiation.
Signal Two: The seesaw of net interest income remains favorable, but risks are rising. Wells Fargo’s net interest income for the quarter was $12.517 billion, up year-over-year
5% (this line benefited from the Fed's more effective use of its balance sheet after lifting its asset size cap); JPMorgan Chase's NII increased 13% year-over-year and exceeded expectations. However, after the Fed raised rates to
After rising to 3.75%-4.00% (the first time since 2023), higher deposit costs and unrealized losses on the bond portfolio are becoming dual pressures.
Signal three: Credit and consumption have not shown signs of strain. Wells Fargo reported quarterly net income of $5.951 billion and EPS of $1.87 (up 13% year-over-year), exceeding market expectations; however, its revenue was $21.870
$1 billion below expectations, with credit loss provisions rising to $1.029 billion (up from $681 million last year, +51%). The bank’s CEO, Schafer (Charlie
Scharf) said, "Consumer spending is increasing, loan delinquency rates remain low, and deposit and investment balances are growing," while cautioning that "higher interest rates, higher oil prices, and persistent inflation pose risks to the economy, but AI
Strong positive forces, such as infrastructure investment, high employment levels, and stable wage growth, still outweigh the risks.
At the sector level, bank stocks have diverged from fundamentals: the KBW Bank Index has declined more than 12% from its August high.
Implications for the U.S. economy: Growth in consumer banking services, with credit quality remaining healthy; risks from high interest rates are accumulating.
JPMorgan Chase's earnings report is also an early diagnostic of the U.S. economy. In his statement, Dimon noted: "Massive fiscal deficits, persistent inflation, elevated asset prices, rising interest rates, and geopolitical conditions continue to evolve beneath the surface. These forces may be manageable, but we are preparing for a range of possible outcomes."
On the positive side, Dimon said, "The U.S. economy continues to be driven by strong corporate investment and sustained consumer spending," citing evidence such as a 10% year-over-year growth in average loans and increased revenue from credit cards and automotive services.
15%. On the risk side, following the Fed's September rate hike and further signals of tightening, coupled with a sharp rise in bond yields, higher borrowing costs and tighter financial conditions could push some borrowers out of the credit market.
JPMorgan Chase's average loans increased 10% year-over-year to $1.6 trillion in Q3; average deposits rose 8% year-over-year to $2.7 trillion. This reflects the unexpectedly strong performance of the U.S. economy so far, with a stable labor market and continued healthy consumer spending, sustaining the industry-critical loan business.
Credit quality remains generally sound: The quarter's credit loss provision was $2.743 billion, below $3.403 billion in the same period last year but slightly above the previous quarter's $2.5 billion. Net charge-offs amounted to $2.2 billion, a year-over-year decrease of
$389 million (primarily from wholesale business); net provision expenses of $539 million, compared to $810 million in the same period last year. The net credit card charge-off rate decreased to 2.91% (3.15% in the same period last year), CCB
Business reserves decreased by 20% year-over-year to $2 billion, with over 650,000 net new checking accounts opened during the quarter.
A notable new variable is AI. On one hand, large tech companies have been aggressively issuing bonds to fund AI, becoming a highlight for investment banking; on the other hand, the market is beginning to discuss AI agents (AI
agents) on the potential impact on banks' low-cost deposits — Apollo's chief economist Torsten Slok has suggested that if households widely use AI
Agent optimization of cash yields could cause banks to lose significant amounts of low-cost deposits, thereby impacting the entire financial system. Bank of America analyst Ebrahim Poonawala on October 4
Ri noted that in the long term, banks will build their own agency interfaces to hedge against this threat: “Banks may need to build for agents, not just for customers.”
Looking ahead, JPMorgan Chase expects fourth-quarter net interest income to be approximately $28 billion, with full-year net interest income around $106.2 billion, above the market expectation of $105.28 billion. Meanwhile, the company anticipates full-year adjusted expenses to be approximately $108.6 billion, higher than its previous forecast of $107.5 billion.
Management reaffirmed its expectation that the net credit card charge-off rate for 2026 will be approximately 3.2%, lower than the previous forecast of nearly 3.4% and last year’s level, reflecting stronger-than-expected consumer credit performance. Credit card losses had previously been a concern due to consumers adjusting to high borrowing costs and accumulating debt.