Bank Earnings Soar As Jamie Dimon Warns Of 'Most Dangerous Time In Decades'

JPMorgan Chief Executive Officer Jamie Dimon made a dire warning about the world's current situation along with the announcement of the bank's third quarter results.

"The war in Ukraine compounded by last week's attacks on Israel may have far-reaching impacts on energy and food markets, global trade, and geopolitical relationships," Dimon said in the earnings statement Friday. "This may be the most dangerous time the world has seen in decades."

He added that the bank is preparing for "a broad range of outcomes," without detailing those.

Israel gave more than 1 million Palestinians living in northern Gaza 24 hours to evacuate to the south, indicating a ground incursion may be near.

Profit of the biggest U.S. bank jumped 35% in the third-quarter to $13.2 billion, driven by the acquisition of First Republic and higher interest rates.

Citi and Wells Fargo

JPMorgan's competitors, Citigroup and Wells Fargo, also benefited from higher rates and reported bigger profits than in the third quarter of 2022.

At Citi, net income rose 2% to $3.5 billion. Wells Fargo profit jumped 61% to $5.8 billion.

The three big banks alerted investors about the state of the economy and slower consumer spending.

"Currently, U.S. consumers and businesses generally remain healthy, although, consumers are spending down their excess cash buffers," Dimon said. "However, persistently tight labor markets as well as extremely high government debt levels with the largest peacetime fiscal deficits ever are increasing the risks that inflation remains elevated and that interest rates rise further from here."

The International Monetary Fund estimates the U.S. economy will grow 2.1% this year, the same pace of 2022, and then slow to 1.5% next year. Annual inflation through September was at 3.7%, well above the Federal Reserve's target of 2%. Markets expect the Fed to increase its benchmark interest rate one more time this year from the current range of 5.25% to 5.5%.

Citigroup's CEO Jane Fraser, pointed to signals of a more careful consumer.

"Personal Banking also had double-digit revenue growth while a continued deceleration in spending indicates an increasingly cautious consumer," she said in the statement.

Fraser said changes announced last month in the bank's structure and strategy are being implemented.

"When completed, we will have a simpler firm that can operate faster, better serve our clients and unlock value for our shareholders," she said, without providing more details of the changes.

Wells Fargo CEO Charlie Scharf said that the quality of credit is being affected by the economic situation.

"While the economy has continued to be resilient, we are seeing the impact of the slowing economy with loan balances declining and charge-offs continuing to deteriorate modestly," he wrote in the earnings statement.

Goldman Sachs, Bank of America and Morgan Stanley will report their third-quarter results early next week.