NEW YORK • JPMorgan Chase & Co, the first big US bank to report earnings after the third-quarter's market tumult, missed analysts' estimates and cautioned that trading is off to a tepid start this quarter.
The largest lender in the United States said revenue fell 6.4 per cent in the three months ended Sept 30, driven by a slump in trading and mortgage-banking results.
Earnings at the corporate and investment bank dropped 13 per cent to US$1.46 billion (S$2.05 billion), as revenue fell 10 per cent from a year earlier to US$8.17 billion.
Adjusted earnings per share was US$1.32, missing the US$1.38 average estimate of 29 analysts surveyed by Bloomberg. Revenue from fixed-income trading tumbled 11 per cent, excluding the impact of selling businesses.
"So far in October, across asset classes, the markets are pretty quiet," chief financial officer Marianne Lake said during a conference call after JPMorgan released its results on Tuesday. "We're only two weeks into the quarter, and it's too early to give specific guidance, but based on those facts alone, analysts' estimates appear high" for the rest of the year, she said.
JPMorgan's earnings show Wall Street firms are still under pressure to cut expenses - potentially including annual bonuses - as volatile markets and the continuation of record-low US interest rates hurt profit. Though the firm shrank noninterest costs by 2.7 per cent to US$15.4 billion in the third quarter, that still was not enough to keep up with its revenue drop.
Ms Lake's comments are "a bad omen for the other banks", said senior banking analyst Pri de Silva at CreditSights in New York. They show that the global market rout and uncertainty around interest rates and economic growth are still prompting investors to curb bets.
"The disclaimer is that there are 21/2 more months to go, but if the current trend continues, activity levels are going to be lower than what's baked into analyst models," he said.
JPMorgan shares fell 1.7 per cent to US$60.50 in late trading in New York on Tuesday.
Net income rose 22 per cent to US$6.8 billion in the third quarter, helped by tax credits that stemmed from the financial crisis.
The firm does not expect similar credits of that magnitude in the future, Ms Lake said. The bank has cut about 10,000 jobs in its workforce this year, she said, without indicating whether more might follow.
"We continue to focus on our commitments, optimise our balance sheet and manage our expenses," chief executive officer Jamie Dimon said in a statement.