JPMorgan Posts Record Net Interest Income on Fed Rate Hikes

JPMorgan Chase & Co. reported its highest quarterly net interest income ever and raised its guidance for the year as the biggest US bank reaps rewards from the Federal Reserve’s interest-rate hikes.

The firm generated $17.6 billion in third-quarter NII, the money it earns on loans minus what it pays out for deposits. Expenses also came in lower than analysts expected, driving a profit beat.

“In the US, consumers continue to spend with solid balance sheets, job openings are plentiful and businesses remain healthy,” Chief Executive Officer Jamie Dimon said in a statement Friday. “However, there are significant headwinds immediately in front of us,” the CEO said, citing high inflation leading to higher global interest rates, quantitative tightening, the war in Ukraine, and “the fragile state of oil supply and prices.”

Investors are scouring Friday’s results for four of the biggest US banks for clues on how consumers and companies are faring as interest rates rise and recession threats mount. Wells Fargo & Co., Citigroup Inc. and Morgan Stanley also report third-quarter results Friday, with Bank of America Corp. and Goldman Sachs Group Inc. up next week.

At a conference Thursday, Dimon said he doesn’t think the US can avoid a recession as the Federal Reserve raises interest rates to choke off inflation. The CEO said his “gut” tells him that the central bank’s benchmark rate will probably have to rise higher than the 4% to 4.5% level many economists are predicting, as price pressures persist. Core inflation, excluding food and energy, jumped to a 40-year high of 6.6% in September from a year earlier, data released Thursday showed.

Shares of JPMorgan, which were down 31% this year through Thursday, rose 2.4% at 7:30 a.m. in early New York trading.