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JPMorgan Chase Earnings: What Happened with JPM

JPM beat on earnings and revenue but fell short on net interest margin

Published October 13, 2021

Key Takeaways

  • Net interest margin was slightly below analyst expectations, down 11.0% on a year-over-year basis and flat sequentially.
  • Net interest margin is a measure of the difference between the interest banks earn on their assets and the interest they pay out to depositors and other creditors.
  • JPMorgan significantly exceeded analyst predictions on EPS and modestly beat predictions on revenue.
JPMorgan Chase Earnings Results
MetricBeat/Miss/MatchReported ValueAnalysts’ Predictions
Earnings Per Share ($)Beat3.742.98
Revenue ($B)Beat29.629.4
Net Interest MarginMiss1.62%1.64%

Source: Predictions based on analysts’ consensus from Visible Alpha

JPMorgan Chase (JPM) Financial Results: Analysis

JPMorgan Chase & Co. (JPM) reported earnings for Q3 FY 2021 on Oct. 13, 2021, before market open. The company solidly beat analyst expectations. Earnings per share (EPS) climbed by 28.1% year over year (YOY), a significantly faster pace of growth than the 2.0% analysts predicted. JPMorgan’s quarterly revenue also came in above forecasts but was up only 1.3% YOY. On the other hand, JPMorgan’s net interest margin came in slightly below analyst expectations, falling by 11.0% YOY and remaining flat on a sequential basis.

JPMorgan’s Net Interest Margin

A key metric for JPMorgan is net interest margin, a measure of the difference between the interest banks earn on their assets and the interest they pay out to depositors and other creditors. In extremely low interest rate environments, net interest margins get squeezed as banks lower rates charged to borrowers in order to remain competitive but are reluctant to push rates they pay to creditors below the lower zero bound. JPMorgan refers to this metric as “net yield on interest-earning assets.”

Analysts predicted a decline YOY in JPMorgan’s net interest margin, which has dropped each quarter since Q1 FY 2019. The company reported net interest margin that fell by a slightly wider margin than predicted YOY, coming up short of analyst predictions. What’s more, net interest margin failed to improve on a sequential basis as predicted, instead remaining flat.

JPMorgan’s Stock Performance and Outlook

Shares of JPMorgan stock have significantly outperformed the broader market in the past year, providing one-year trailing total returns of 65.5% as compared with 23.1% for the S&P 500. Shares climbed by as much as 1.1% in extended hours trading following the earnings release.

The company did not provide any forward guidance in its earnings release.

Next Earnings Report

JPMorgan Chase’s next earnings report (for Q4 FY 2021) is estimated to be released on Jan. 13, 2022.

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