Jamie Dimon Stashes $3.1B for Bad Loans… But Still Laughs in Wall Street’s Face with Q3 Earnings

JPMorgan’s third-quarter results just dropped, and while it’s not the best day in the office for Jamie Dimon and his crew, it’s not exactly panic mode either. 

The bank reported a 2% dip in net income, which fell to $12.9 billion, down from $13.2 billion in the same quarter last year. That’s a pretty hefty hit, mainly because they’ve been stashing more cash to cover potential bad loans. But somehow earnings per share (EPS) actually went up. Yep, you read that right. Thanks to fewer outstanding shares, JPMorgan’s EPS rose to $4.37 from $4.33 a year ago, beating Wall Street’s estimates of $3.99. So, what’s really going on here?

JPMorgan had to set aside $3.1 billion to cover potential credit losses (more than double what they tucked away this time last year). That’s a red flag, especially when you consider that loan losses have been unusually low since 2020, thanks to government stimulus efforts. But with households running out of that rainy-day money and borrowing more, JPMorgan is bracing for some thunderstorms ahead.

And if Dimon sounds a little spooked, that’s because he’s been talking up the geopolitical mess we’re all living in right now. He didn’t hold back, calling the global situation “treacherous and getting worse.” Dimon’s got his eyes on everything from Ukraine to tensions in the Middle East, and it’s clear he’s expecting this chaos to have long-term economic consequences. Basically, Dimon is saying, “Hope for the best, but prepare for the worst.”

Now, for the part JPMorgan probably wishes they could put on a billboard: total revenues rose to $43.3 billion, up from $40.7 billion last year. And net interest income (NII) (basically the difference between what JPMorgan makes on loans and what they pay out on deposits) also climbed 3% to $23.5 billion, beating the $22.9 billion analysts were expecting.

Here’s the thing, though: NII has been the bank’s moneymaker for the last couple of years, thanks to higher interest rates. But those rates are starting to cool off, and JPMorgan knows it’s only a matter of time before that well starts drying up. The Fed’s recent rate cut in mid-September didn’t have much of an impact on this quarter’s results, but you can bet analysts will be watching closely to see how future cuts hit JPMorgan’s bottom line.

Despite the drop in net income, Wall Street’s not exactly throwing in the towel. JPMorgan’s investment banking division crushed it this quarter, with revenue up 29% to $2.4 billion. That’s got people talking about a dealmaking revival after two years of underwhelming activity. The bank’s CFO, Jeremy Barnum, even hinted that these results align with the “soft landing” narrative everyone’s been talking about—or, as he called it, a “no landing” scenario.

In other words, even though JPMorgan is stacking up provisions for bad loans, they’re still making money hand over fist in other areas. The U.S. consumer is holding strong, at least for now, and that’s helping keep the bank’s credit card business afloat.

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