It’s our favorite time of the season again – earnings. And by the looks of JP Morgan’s (JPM) latest release, the bank is in two minds about it. The bank’s Q3 2021 profit rose by 24% but revenue was up only by a slight 1% due to unimpressive lending figures.
The banking sector’s earnings will be of key importance this quarter as most players in the industry built up large reserves during the early days of the pandemic. As the global economy rebounds, those reserves are slowly being unwound and lending figures are going up but just not at a fast enough rate. Credit card loans for JP Morgan were only up by 2% while corporate loans dropped by 5%. As saving rates for consumers decrease, though, the company expects customers to start holding more debt – particularly with the holiday season around the corner. Other banks saw similar profits with Citigroup (C) posting a 48% increase, Morgan Stanley (MS) recording a 25% net income jump, and Bank of America (BAC) posting a 58% rise.
why it matters
JP Morgan’s lacklustre results have led its stock price to drop by 3.9% over the past five days, while Citigroup, Morgan Stanley, and Bank of America have seen a 1.5% drop, a 2.0% rise and 2.3% uptick, respectively, over the same time period.