JPMorgan is a good window into America’s financial habits. Its third-quarter earnings show a country split into two kinds of people: those taking risks with money that belongs to others and those being cautious with their own, johnsfoley argues.
is a good window into America’s financial habits. Third-quarter earnings show a country split into two kinds of people: those taking risks with money that belongs to others, and those being cautious with their own.
Customers who take risk on their own behalf remain more reticent. Credit-card users, who account for $1 of every $7 JPMorgan extends, are spending more but keeping a lid on outstanding balances. Interest income and fees amounted to less than 10% of total loans, the lowest in at least five years. That’s due to a trifecta of low interest rates, disciplined households, and the bank’s jumbo spending on marketing and rewards to lure punters further into debt.
Meanwhile, JPMorgan is keeping its powder dry for when animal spirits return. The bank has excess capital in spades, and around $500 billion more cash deposited at other lenders than at the end of 2020. Its $500 billion market capitalization is almost twice its book value, the highest ratio in nearly 20 years. That suggests investors think interest rates will rise, companies will borrow more and consumers will get back to spending beyond their means, sooner rather than later.- JPMorgan on Oct.
- Average loans through the quarter rose 5% year-on-year, whereas in the second quarter loans had been flat. Chief Executive Jamie Dimon said the bank saw “early signs” of loan growth in commercial real estate.
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