JPMorgan Chase (JPM)

Global financial services giant JPMorgan Chase (NYSE:JPM) reported revenue ahead of Wall Street’s expectations in Q3 CY2025, with sales up 10.5% year on year to $47.12 billion. Its GAAP profit of $5.07 per share was 5.4% above analysts’ consensus estimates.

Company Overview

Tracing its roots back to 1799 when its earliest predecessor was founded by Aaron Burr, JPMorgan Chase (NYSE:JPM) is a leading financial services company offering investment banking, consumer banking, commercial banking, and asset management services globally.

At their core, diversified banks take in deposits and engage in various forms of lending, which means revenue is generated through interest rate spreads (difference between loan and deposit rates) and fees. Other revenue comes from adjacent services such as wealth management, card and account fees, and products such as annuities. These institutions benefit from rising interest rates that improve NIMs (net interest margins), digital transformation reducing operational costs, and expanding wealth management services as populations age. However, they face headwinds including fintech competition disrupting traditional models (how disruptive is crypto?), stringent regulatory requirements increasing compliance costs, and cybersecurity threats requiring substantial technology investments. Economic downturns also pose risks through potential loan defaults and compressed margins during accommodative monetary policy periods.

JPMorgan Chase competes with other major financial institutions including Bank of America (NYSE:BAC), Citigroup (NYSE:C), Wells Fargo (NYSE:WFC), and Goldman Sachs (NYSE:GS) in the United States, as well as global banks like HSBC (NYSE:HSBC) and Deutsche Bank (NYSE:DB).

From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions. Over the last five years, JPMorgan Chase grew its revenue at a solid 8.7% compounded annual growth rate. Its growth beat the average banking company and shows its offerings resonate with customers, a helpful starting point for our analysis.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. JPMorgan Chase’s annualized revenue growth of 8.1% over the last two years aligns with its five-year trend, suggesting its demand was predictably strong. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, JPMorgan Chase reported year-on-year revenue growth of 10.5%, and its $47.12 billion of revenue exceeded Wall Street’s estimates by 4.1%.

Net interest income made up 50.7% of the company’s total revenue during the last five years, meaning JPMorgan Chase’s growth drivers strike a balance between lending and non-lending activities.

Markets consistently prioritize net interest income growth over fee-based revenue, recognizing its superior quality and recurring nature compared to the more unpredictable non-interest income streams.

Topline growth carries importance, but the overall profitability behind this expansion determines true value creation. For banks, the efficiency ratio captures this relationship by measuring non-interest expenses, including salaries, facilities, technology, and marketing, against total revenue.

Investors place greater emphasis on efficiency ratio movements than absolute values, understanding that expense structures reflect revenue mix variations. Lower ratios represent better operational performance since they show banks generating more revenue per dollar of expense.

Over the last four years, JPMorgan Chase’s efficiency ratio has swelled by 4.7 percentage points, going from 56.3% to 51.7%. Said differently, the company’s expenses have grown at a slower rate than revenue, which typically signals prudent management.

In Q3, JPMorgan Chase’s efficiency ratio was 52%, beating analysts’ expectations by 156 basis points (100 basis points = 1 percentage point). This result was in line with the same quarter last year.

For the next 12 months, Wall Street expects JPMorgan Chase to become less profitable as it anticipates an efficiency ratio of 53.6%.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

JPMorgan Chase’s EPS grew at an astounding 21.4% compounded annual growth rate over the last five years, higher than its 8.7% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its efficiency ratio didn’t improve.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For JPMorgan Chase, its two-year annual EPS growth of 9.8% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q3, JPMorgan Chase reported EPS of $5.07, up from $4.37 in the same quarter last year. This print beat analysts’ estimates by 5.4%. Over the next 12 months, Wall Street expects JPMorgan Chase’s full-year EPS of $20.18 to stay about the same.

Banks are balance sheet-driven businesses because they generate earnings primarily through borrowing and lending. They’re also valued based on their balance sheet strength and ability to compound book value (another name for shareholders’ equity) over time.

This explains why tangible book value per share (TBVPS) stands as the premier banking metric. TBVPS strips away questionable intangible assets, revealing concrete per-share net worth that investors can trust. EPS can become murky due to acquisition impacts or accounting flexibility around loan provisions, and TBVPS resists financial engineering manipulation.

JPMorgan Chase’s TBVPS grew at an incredible 10.9% annual clip over the last five years. TBVPS growth has also accelerated recently, growing by 14.2% annually over the last two years from $81.00 to $105.70 per share.

Over the next 12 months, Consensus estimates call for JPMorgan Chase’s TBVPS to grow by 4.5% to $110.45, paltry growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, JPMorgan Chase has averaged a Tier 1 capital ratio of 15.3%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, JPMorgan Chase has averaged an ROE of 16.1%, exceptional for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This shows JPMorgan Chase has a strong competitive moat.

We enjoyed seeing JPMorgan Chase beat analysts’ revenue expectations this quarter. We were also happy its tangible book value per share narrowly outperformed Wall Street’s estimates. On the other hand, its net interest income slightly missed. Overall, this print had some key positives. The stock remained flat at $307.54 immediately after reporting.

Updated: December 4, 2025 at 11:44 PM EST

A common mistake we notice when investors are deciding whether to buy a stock or not is that they simply look at the latest earnings results. Business quality and valuation matter more, so we urge you to understand these dynamics as well.

JPMorgan Chase isn’t a terrible business, but it doesn’t pass our quality test. First off, its revenue growth was mediocre over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its TBVPS growth was exceptional over the last five years, the downside is its net interest margin limits its operating profit potential compared to other banks that can earn more, all else equal.. On top of that, its estimated sales for the next 12 months are weak.

JPMorgan Chase’s P/B ratio based on the next 12 months is 2.5x. This valuation tells us it’s a bit of a market darling with a lot of good news priced in - we think there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $328.04 on the company (compared to the current share price of $315.98).