JPMorgan Chase just reported its first earnings miss in nearly three years, and its stock still rose. That tells you how Wall Street read the first big bank results of the season on Tuesday: the headline per-share number mattered less than what executives said about the borrowers behind it.
The picture from JPMorgan, Goldman Sachs, Citigroup and Wells Fargo is split. Consumers are paying their bills. Trading desks had a strong quarter. And the most closely watched banker in America is warning that rising interest rates and sticky inflation are shifting under the surface. With the September inflation report due Wednesday morning, that warning arrives at an awkward moment.
Four banks, four different quarters
JPMorgan earned $15.3 billion, or $5.57 per share, up from $14.4 billion, or $5.07 per share, a year earlier, according to the Associated Press. Analysts had expected about $5.90 to $5.93 a share, depending on the survey. The AP attributed the miss to the investment banking and trading side, where fixed-income trading slowed from earlier in the summer and from last year. Yahoo Finance reported that excluding $658 million in securities losses, the bank earned $5.75 a share. That adjusted figure comes from a single outlet, so treat it with care.
Goldman Sachs had the standout quarter. Profit reached $5.29 billion, or $17.01 per share, compared with $4.1 billion, or $12.25 per share, a year earlier, the AP reported. Forbes detailed the source: equities trading revenue jumped 72% to $6.44 billion, while fixed income, currencies and commodities revenue slipped 1% to $3.47 billion. Investment banking fees rose 21% to $3.22 billion. Yahoo Finance put total revenue up 23% at $18.68 billion.
Citigroup reported profit up 40% from a year earlier, beating expectations, on stronger investment banking and wealth management revenue, per the AP. Its net interest income rose 13.7% to $16.98 billion, according to Forbes. The credit card business was the soft spot. The AP described card profit as flat, while Forbes said it fell 8%, so the exact change depends on the measure.
Wells Fargo earned $5.95 billion, or $1.87 per share, ahead of forecasts. Revenue rose 2% to about $21.9 billion, per Yahoo Finance. Schwab’s market update noted that revenue came in below the consensus estimate, its third such miss in four quarters. The AP linked the bank’s steady profit growth to federal regulators lifting the asset cap imposed after its sales practices scandal.
The consumer still looks healthy
Credit card data is often the first place stress shows up, and this quarter it was calm. Yahoo Finance reported that card charge-offs, the share of balances banks give up on collecting, improved at all three banks that detailed them:
- JPMorgan: 2.91%, down from 3.15% a year earlier.
- Wells Fargo: 3.73%, down from 4.02%.
- Citigroup: 3.6%, down from 4.0%, with U.S. card spending up 11%.
Wells Fargo CEO Charlie Scharf said, “Our data shows that our consumer and business customers are doing well,” and described delinquencies as low. He pointed to AI infrastructure investment, high employment and wage growth as forces that outweigh the risks from higher rates, oil prices and inflation.
The AP offered the same read of the economy: businesses continue to invest heavily in AI, and consumers keep paying their bills.
Where the caution shows up
Provisions, the money banks set aside for expected loan losses, tell a more careful story. Forbes reported that Wells Fargo set aside $1.03 billion, up from $914 million in the second quarter and $681 million a year earlier. Yahoo Finance noted that both Wells Fargo and Citigroup raised total provisions from a year ago despite healthy consumer credit. JPMorgan’s $2.74 billion provision was lower than the $3.40 billion a year earlier, but Forbes cautioned that a $2.2 billion provision tied to the Apple Card portfolio transaction distorts that comparison.
Put simply, borrowers look fine today, and banks are still adding cushions. That gap is worth noticing.
Jamie Dimon was the most direct. The AP quoted him saying the U.S. economy “continued to be fueled by strong business investment and ongoing consumer spending.” He then flagged “large fiscal deficits, sticky inflation, elevated asset prices, rising interest rates” as factors moving beneath the surface. Yahoo Finance added that he warned another one-percentage-point rise in rates could be especially painful, as borrowers refinance at higher costs and credit spreads widen.
The backdrop supports his concern. The AP noted that yields on 10-year and 30-year Treasurys rose to levels not seen in years this summer, and that the Federal Reserve raised rates last month citing higher diesel, technology and food prices. Schwab’s Liz Ann Sonders said CPI and the producer price index are “key to whether rate hike odds shift,” and the firm noted that the Fed’s first rate hike in three years could weigh on loan demand.
What the market is pricing
Reaction was muted and mixed, which fits a quarter without a clean story. The AP reported JPMorgan shares up 0.8% in early trading, Goldman up 1.9%, Citigroup down 0.7% and Wells Fargo down 1.5%. Early moves varied by outlet, so those figures are a snapshot, not a verdict.
The larger earnings picture is strong. FactSet data cited by the AP expects S&P 500 earnings per share to grow nearly 30% from a year ago, which would be a third straight quarter above 25%. Strong earnings and rising rates can coexist for a while. The question is how long.
What to watch this week
Bank of America, Morgan Stanley and BlackRock report on Wednesday, giving a fuller read on consumer lending and wealth management. Before them, at 8:30 a.m. Eastern, comes the September Consumer Price Index. Schwab’s survey of forecasters expects headline inflation of 3.7% from a year earlier and core inflation of 2.5%.
If the CPI figures come in hotter than expected, Dimon’s warning gets louder. If they cool, the bond market may get some relief and the pressure on borrowers eases. Either way, the next several earnings reports should show whether provisions keep climbing even as charge-offs stay low.
For households, the practical link is rates. Higher Treasury yields feed into mortgage rates, auto loans and credit card APRs. Banks can absorb that for a while. Borrowers feel it faster.
Editor’s take
Skip the beat-or-miss scoreboard and watch provisions and card charge-offs. Charge-offs tell you how borrowers are doing now. Provisions tell you what bankers expect next. Right now the first is improving while the second is rising, and I would trust the banks’ caution over their comfort. Anyone who has been through a mortgage process knows rate moves reach a household budget faster than they reach a bank’s earnings. This is a judgment call by the editor, and one hot CPI print could change the read.
