JPMorgan hit by slowdown in investment banking momentum, shares slip

(Corrects to add percentage sign in paragraph 3)

Oct 13 (Reuters) - JPMorgan Chase's profit rose in the third quarter, driven by investment banking ​and trading performance, but its shares fell 3% in premarket trading as a recent slowdown in dealmaking raised concerns about future growth.

Wall Street's dealmakers had a cracking start to the year, ‌highlighted by the historic listing of Elon Musk's SpaceX. But the IPO market has lost steam in recent weeks, threatening what could have been ⁠a banner year for the investment banking business.

JPMorgan ​reported an 8% decline in investment banking fees ⁠versus the second quarter even as it recorded a 14% rise compared with a year earlier.

"Investment banking ‌fees each rose at a ‌mid-teens rate, helped by strong levels of client activity, although activity did moderate somewhat during ⁠the quarter," CEO Jamie Dimon said in a statement.

Analysts say ⁠the IPO market is selective, not shut, and delayed offerings could still launch if conditions stabilize during the fourth quarter. Banks earn lucrative fees from underwriting the initial offering, as well as from subsequent follow-on sales as companies issue more shares.

The bank has retained its crown as the top earner of investment banking revenue, according to Dealogic data.

Wall Street's trading desks have enjoyed a strong ‌year, with JPMorgan extending its winning streak as market volatility driven by ​uncertainty over global interest rates and surging energy prices boosted trading activity.

Revenue at JPMorgan's markets division, which houses its equity and fixed-income trading desks, climbed 15% in the third quarter from the prior year.

The US banking giant on Tuesday posted net income of $15.3 billion, or $5.57 per share, for the three months ended September 30, compared with $14.4 billion, or $5.07 per share, a year earlier.

CONSUMER BANKING BOOST

The US economy has so far defied expectations as the labor market has held up and consumer spending ​remains healthy, keeping the industry's crucial lending business churning.

Net interest income, excluding markets - the difference between what a bank earns off ‌loans and pays ‌out on deposits - ⁠increased 6% in the quarter to $24.7 billion. Average loans rose 10% year-over-year.

"The US economy continued to be fueled by strong business investment and ongoing consumer spending," Dimon said.

Loan growth has come into sharper focus after the Federal Reserve hiked interest rates for the first time since 2023 in September, with hawkish signals of more ‌possible tightening ahead.

That, combined with ​a spike in bond yields, has the potential to push ‌borrowers out of the credit ⁠market as they navigate ​higher borrowing costs and tighter financial conditions.

(Reporting by Manya Saini in Bengaluru and Nupur Anand in New York; Editing ​by Saumyadeb Chakrabarty)

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