A good Q3 earnings start from US banks
JPMorgan Chase and Wells Fargo are both surprising to the upside on net revenue and both are also beating on net interest margin but posting bigger than estimated credit provisions in maybe an early sign that credit is getting weaker faster than estimated by analysts. JPMorgan’s investment banking activities were better than feared during the quarter and FICC sales & trading was in particularly strong vs estimates. JPMorgan Q3 EPS is $3.13 down 17% y/y. While JPMorgan and Wells Fargo both benefited from their commercial banking activities, Morgan Stanley had a more challenging Q3 with net revenue missing estimates.
JPMorgan CEO Jamie Dimon says that the impact on regulatory capital requirements is still uncertain (US banks are holding large unrealized losses on their bond portfolio worrying regulators) and he hopes the bank can resume buybacks early next year. Dimon is also reiterating his recent points from an interview that the US economy is strong right now but facing imminent headwinds. JPMorgan and Wells Fargo shares are up 2% in pre-market.