JPMorgan gets Wall Street lift, warns of economy 'softening'

• Key insight: JPMorganChase saw strong dealmaking and trading boost profits in the third quarter.
• Forward look: The company left guidance for net interest income and expenses materially unchanged.
• Supporting data: The company's investment banking fees rose 16% from the prior year, to $2.6 billion.

This news is developing. Check back for updates.

JPMorganChase saw profits climb 12% in the third quarter, as bread-and-butter Wall Street activities and the as-yet stable state of consumers kept the bank on track to meet, or exceed, its earnings guidance.

The country's largest bank by assets logged $14.4 billion in its most recent quarter, the bank announced Tuesday, as lower rates and deposit margin compression kept year-over-year net interest income excluding markets relatively flat. But strong investment banking business helped push markets revenue up 25%.

JPMorgan brought in $5.07 in diluted earnings per share in the third quarter, which ended Sept. 30, beating consensus analyst estimates of $4.81 for another quarter.

CEO Jamie Dimon said in a prepared statement Tuesday morning that the bank is also monitoring potential threats to the economy.

"While there have been some signs of a softening, particularly in job growth, the U.S. economy generally remained resilient," Dimon said. "However, there continues to be a heightened degree of uncertainty stemming from complex geopolitical conditions, tariffs and trade uncertainty, elevated asset prices and the risk of sticky inflation."

The $4.6 trillion-asset company's investment banking unit saw the benefit from additional economic certainty during the third quarter, as mergers and acquisitions picked up momentum. Investment banking revenues were up 16% year over year, beating the bank's guidance of a low-double-digit percentage increase.

The company's provision for credit losses, of $3.4 billion, was up 9% from the prior year, and 19% from the second quarter.

Of the provision, $809 million came from the commercial and investment bank, driven by charge-offs related "to what appears to be borrower-related collateral irregularities in certain secured lending facilities and changes in credit quality of certain exposures," the bank said.

JPMorgan was reported to have counted losses from the bankruptcy of used-car seller Tricolor Holdings, which filed for Chapter 7 liquidation last month after allegations of fraud. Some other banks have reported that they may have lost between $30 million and $200 million in charge-offs from their connections to Tricolor.

In consumer and community banking, which had been tepid for years, average deposits remained flat, but client investment assets rose 15% from the prior year. Loans increased just 1% from the same period last year, but debit and credit card sales volume ticked up 9%. Home lending was still depressed, down 3% from the prior year, but card services and auto business was up 12%.

Still, Dimon's continual warnings about the geopolitical balance have made more waves in JPMorgan's strategic planning.

Security backdrop

The earnings news comes on the heels of JPMorgan announcing plans to funnel $1.5 trillion into the security industries, amid increasing trade friction between the U.S. and China. The bank pledged Monday to increase its capital, resources and personnel allocations into sectors like rare earth minerals, pharmaceutical precursors and robotics, or ventures developing defense, aerospace and energy technologies.

Last week, President Donald Trump announced he would impose a 100% tariff on goods from China after the country said it would more strictly control exports of items that use traces of rare earths, along with the technology for processing them.

"It has become painfully clear that the United States has allowed itself to become too reliant on unreliable sources of critical minerals, products and manufacturing — all of which are essential for our national security," Dimon said in a statement Monday announcing the bank's target. "We need to act now."