U.S. Banks Post Strong Q3 Results: "Economy Healthy, But Bubble Concerns Remain"

JP Morgan, Goldman Sachs, and Citigroup Deliver Earnings Surprise
M&A, Equity, and Bond Markets Show Strong Momentum
U.S. Economy Remains Healthy, but Some Lending Markets Flash Warning Signs

Jamie Dimon, CEO of JP Morgan Chase, the largest bank in the United States. On the 14th (local time), major U.S. banks announced third-quarter earnings that exceeded expectations. Photo by Reuters and Yonhap News

Major U.S. banks posted an "earnings surprise"-results exceeding expectations-in the third quarter despite ongoing uncertainty. While bank CEOs assessed that the U.S. economy remains generally healthy, they also cautioned against the risk of a "bubble" arising from excessive optimism.

JP Morgan Chase, the largest bank in the United States, announced on the 14th (local time) that its third-quarter net profit reached 14.39 billion dollars (approximately 20.5 trillion won), a 12% increase compared to the same period last year. Earnings per share stood at 5.07 dollars, surpassing the expert forecast of 4.84 dollars compiled by market research firm LSEG.

Goldman Sachs also reported that its third-quarter net profit rose to 4.1 billion dollars (5.9 trillion won), a 37% increase year-on-year. Earnings per share were 12.25 dollars, exceeding the projection of 11 dollars. Citigroup likewise recorded a third-quarter net profit of 3.8 billion dollars (5.4 trillion won), up 16% from the same period last year.

Overall, these strong results were driven by active mergers and acquisitions (M&A) and increased equity and bond trading amid market uncertainty. Jeremy Barnum, Chief Financial Officer of JP Morgan, said, "This summer marked the highest number of M&A disclosures in quite some time."

The banks noted that while there are warning signs in some lending markets, the broader U.S. economy remains relatively healthy. For example, JP Morgan Chase reported that its non-performing loan ratio has surpassed pre-COVID-19 pandemic levels and is approaching an all-time high.

At the same time, the Financial Times reported that CEOs expressed concern that the recent rally in financial markets is being fueled by excessive optimism.

Jamie Dimon, CEO of JP Morgan, stated, "There are many assets that already appear to have entered bubble territory," adding, "This does not mean they cannot rise another 20% in the near term, but it is another reason for concern."

Jane Fraser, CEO of Citigroup, commented, "The U.S. economy is still running strong, and the global economy is proving more resilient than expected," but also noted, "There are some overvalued areas in the market, and a measured approach is necessary."

Meanwhile, despite its strong performance, Goldman Sachs maintained its previously announced stance on workforce reduction. The company plans to enhance efficiency through artificial intelligence (AI) technology. In January, Goldman Sachs announced its intention to reduce operating expenses by 1.3 billion dollars (1.9 trillion won) over the next three years.

David Solomon, CEO of Goldman Sachs, stated in a staff memo, "We are still in the early stages of exploring optimal AI solutions, but we must reflect the transformational efficiencies that technology can bring," emphasizing, "To fully realize the potential of AI, we need to increase the speed and agility of our overall work."