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Welcome back to Big Picture Investing. I'm Kevin McCormick, and today we're analyzing JP Morgan Chase's third quarter 2026 results. Ticker JPM. The report was published before the market opened on October 13, 2026. Here is the main conclusion right away. JP Morgan just made a rare forecasting error.
Reported net income was $15.3 billion, or $5.57 per share. That's up 6% and 10% year-over-year, but below Wall Street forecasts, which ranged from $5.90 to $5.93. Managed revenue was $50.9 billion. Announced revenue— $50.2 billion versus consensus forecast of about $51.2 billion. Excluding losses on securities, adjusted net income was $15.8 billion.
Adjusted earnings per share (EPS) was $5.75 with a return on tangible capital employed (ROTCE) of 21%. And yet the market did not remain in the " red" zone. Shares initially fell several percent due to the failure to meet forecasts. News feeds showed pre-market declines of 3 to almost 4%. Then they played down the decline and got into positive territory in the morning.
Growth of approximately 1–2% according to our data. It is this tension that is important for this channel. Bank reports themselves often look worse against this background. What remains more important is Jamie Dimon's opinion on the economy, consumer lending, and what he is preparing for . And also the forecast for net interest income, which helped change the mood in the market.
Today we will analyze the numbers. NII forecast, capital review and share buybacks, and then we'll translate the content of the conversation with Dimon and CFO Jeremy Barnum. Bearish scenario, bullish scenario and the overall picture for your portfolio. Let's dive into the numbers. Let's start with the main thing.
$15.3 billion in net income on $50.9 billion in managed revenue looks good when viewed individually, but not against the backdrop of a market that expected perfect results. That's why it's important. The mistake of the largest US bank is an event that affects the mood of the entire financial sector, so before the market opened, people first sold and then asked questions.
Moving on to the quality of the report: the bank suffered $658 million in pre-tax losses from securities, which is about 18 cents per share, so the adjusted $5.75 and 21%ROTCE are important as a second look. Expenditures amounted to $27.3 billion, up 12% year-on-year . This is a real pain point that the bears will be pressing on .
Borrowing costs amounted to $2.7 billion . Net interest income reached $27.1 billion , an increase of 13%. Net interest income excluding markets was $24.7 billion, up 6%. So, the underlying deposit and loan mechanisms were still growing, it just wasn't enough on day one to satisfy a market that wanted more.
So what really changed inside? Let's focus on markets and investment banking—a division that could change the quarter's results. Markets revenue was $10.3 billion , up 15%. The stock was a star, up 49%, about $5 billion. FICC fell 4%. Investment banking fees grew by 14%, especially due to consulting services.
The net profit of the commercial and investment bank was 8.2 billion on revenue of 22.7 billion, which is 14% more. Here's why it's important for you as an investor. When equity trading is up and consulting is holding up, it suggests that risk appetite in institutional markets is alive, even as Dimon warns otherwise.
Weak FICC performance and a slowdown compared to a strong second quarter— that's why it was perceived as an underperformance rather than a surefire success. And that brings us to consumer franchising, consumer and community banking. Net profit 5.7 billion. Revenue 21.2 billion, growth of 9%. Over 650,000 net new checking accounts.
First place in retail deposits for the sixth year in a row. Debit and credit card spending increased by 10%. Net card charge-off rate 2.91%. The consumer continues to spend and use Chase services. The open question is not whether they are healthy today. Dimon says the labor market supports this. The question is what happens if rates remain high and the Fed cools the economy to the point where unemployment rises .
Asset and wealth management added $ 1.8 billion in net income on revenue of $ 6.9 billion, up 14%, with $51 billion in long-term net inflows and $ 7.9 trillion in client assets. Calm accumulation under the brand "fortress". Let's move on to forecasts, because this is the main reason why stocks climbed out of the hole.
For the fourth quarter, management is forecasting NII (net interest income) excluding markets at around $25.5 billion, and total NII at around $ 28 billion. Expenses in the fourth quarter will be about 27.5 billion. The net charge-off rate on cards is forecast at around 3.2 %, unchanged. And now the figure that overshadowed the underperformance in many morning reports.
The baseline forecast for 2027 for NII excluding markets is about $107 billion . The annual figure at the fourth quarter pace of 25.5 billion gives approximately 102 billion . So, about $5 billion of hidden growth—partly due to the yield curve and rising rates, mostly due to balance sheet growth and portfolio structure.
The bank remains asset-sensitive. Dimon made it clear that there is more uncertainty than usual about this path. Preliminary spending for 2027 is close to Wall Street's consensus forecast—about $ 114 billion. The "fortress" franchise continues to increase NII, spending on competition, these are not fantasies about inflated markets.
Now fundamentals , capital buybacks, and a "fortress" test. This is where the story of the hierarchy of capital becomes loud. Ordinary dividends were 4.4 billion, or $1.65 per share. Net buybacks this quarter were only about $664 million, not the usual $ 7 billion . The CET1 ratio ( standardized) was 13.9%, down 30 basis points over the quarter.
The book value of one share is $132.30, an increase of 6%. Cash and securities, $1.5 trillion . That's why it's important. Management has approximately $30 billion in excess capital and is choosing dividends and organic growth over aggressive share buybacks because it believes it can reinvest at a better than 6% annualized rate of return per share .
The strategic resource initiative envisages 1.5 trillion over 10 years, and in the first year it has already exceeded 200 billion. This is not a story about stock declines this quarter. This is a story about fortitude and reinvestment, and the market had to digest it in real time. Let's translate the income statement.
Jamie Dimon's prepared frame is the reason why this package is focused on the big picture. The economy is strong. Business investment and consumer spending are in place, but risks are shifting beneath the surface. Budget deficits, persistent inflation, high asset prices, rising interest rates, geopolitics.
The bank is prepared for a wide range of consequences. This is not a call for a recession. This is a stress-preparation memo from a CEO who has been warning in advance for decades. As for the consumer, Dimon's logic is simple. The health of the labor market supports credit today. If rates remain restrictive and the Fed cools activity , unemployment will rise and credit will weaken.
Card charge-offs at around 3.2% are an object for monitoring. Not a crisis indicator today, but a path dependence tomorrow. As for credit conditions, they are tightening. Weak covenants and priming, they say they won't chase the market. In terms of investment banking, the order book is like an accordion.
Europe is healthier, the US has slowed somewhat after the September rate- driven sell-off . Regarding agent AI: protect customers, keep third-party agents out of systems, compete with trust and affiliates. AI costs are about $700 million, not $2 billion, and the benefits are not yet reflected in the income statement.
Dimon also suggested that the likelihood of a market event or stress may be higher than others think, with the 10-year bond yield possibly reaching 6%. Careful preparation, not a forecast worth trading on a single headline. The math of Jeremy Barnum's forecasts, a bridge between Q4 and NII 2027 , gave fundamental buyers a reason to buy the dip .
So, let's weigh everything and consider the bearish scenario. Bears point out the obvious. This was a rare EPS and revenue decline against a backdrop of a market accustomed to "beat and improve" from JPM. Expenses increased by 12%. Share buybacks fell from a multi-billion dollar pace to 664 million, which could be interpreted as a better use of funds elsewhere or as less support for the stock.
Weak FICC, a gradual cooling of investment banking compared to the summer surge, charge-offs on cards approaching the forecast of 3.2%, as well as Dimon's own statements about high asset prices, geopolitics and rising risks give skeptics reason to expect a decline in financial indicators by the end of the year.
All of this does not create a target price. This only means that disappointing results, coupled with a CEO warning, could change the valuation of risk premiums, even if annual profits are growing. On the other hand, the arguments of " bulls". The Bulls argue that the failure was only a visual setback against the backdrop of high expectations, and not a problem with the entire structure.
Net profit still grew by 6% year-on-year. Adjusted ROTCE at 21% is an elite indicator for a bank of this scale. The 49% increase in income from stock trading shows that the market mechanism is still working. The 10% increase in consumer accounts and spending indicates that the retail segment remains strong.
The net interest income (NII) forecast for the fourth quarter and 2027, especially the base case of 107 billion, is the main reason for the stock's rebound. $1.5 trillion in cash and securities is a “ fortress” in simple terms. Reducing share buybacks with $30 billion in excess capital is a positive signal if investing in organic growth yields more than reducing the number of shares at a 6% return.
Again, no made-up target prices, just the logic of market recovery. So, what is the overall prognosis? JPMorgan's third quarter is less an EPS failure and more a signal that the largest US bank is sending for the rest of the reporting week. Competitors like Bank of America, Wells Fargo and Citigroup will be judged through the lens of Dimon's consumer lending and his warnings about stress, whether they like it or not.
Macroeconomic issues—the path of interest rates, unemployment, fiscal deficits, and the question of whether high asset prices can coexist with sustainable inflation. The official profit and loss statement still talks about a " fortress". The forecast still points to growth in NII. The CEO still says to prepare for a wider range of results than the consensus forecast suggests.
There are few open questions. Will the NII base case of $107 billion by 2027 hold up if the curve reverses? Will the consumer remain financially healthy if unemployment rises? And will capital remain focused on organic growth? Or will the pace of share buybacks return when reinvestment opportunities run out?
If this helped you separate an isolated setback from a morning bounce, and also helped you understand Dimon's warning about the risks lurking beneath the surface, like this video, subscribe to Big Picture Investing, and leave a comment. Was it simply a failure to meet high expectations, or a market stress memo from Jamie Dimon? Kevin McCormick was with you . See you in the next video.
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