JPMorgan's profit falls as loan loss provisions dwarf investment banking

(Reuters) – JPMorgan Chase's profit fell in the third quarter as a larger provision for potential loan losses offset gains from investment banking, the bank said on Friday.

As consumers deplete savings accumulated during the pandemic, banks are building up inventories to serve as protection if borrowers can no longer repay their loans.

Consumers' financial health remains solid despite elevated interest rates and unemployment fears.

Still, CEO Jamie Dimon maintained his dovish tone on the economy even as stock markets hit record highs and the Federal Reserve began a long-awaited cycle of interest rate cuts.

“We have been closely monitoring the geopolitical situation for some time and recent events show that conditions are treacherous and getting worse,” Dimon said.

“There is significant human suffering and the outcome of these situations could have far-reaching implications for both short-term economic outcomes and, more importantly, the course of history.”

Net interest income (NII) – the difference between what a lender earns on loans and what it pays on deposits – rose 3% to $23.5 billion.

The bank's trading on Wall Street proved to be a bright spot as the prospect of Fed easing led to a rally in stocks in the third quarter.

Investment banking revenue rose 29% to $2.4 billion. This is above management's forecast of 15% last month.

The lender set aside $3.11 billion in provisions for loan losses, compared with $1.38 billion a year ago.

Profit was $12.90 billion in the three months ended Sept. 30, compared with $13.15 billion a year ago.

Shares rose about 1% to $214.79 in premarket trading.

(Reporting by Niket Nishant in Bengaluru and Nupur Anand in New York, Editing by Lananh Nguyen and Arun Koyyur)