JPMorgan maintained its rank as the world's most systemically important bank, according to the latest rankings from the Group of 20's Financial Stability Board (FSB) released Monday, beating 29 other global banks.
Ranking The FSB launched the annual list of globally systemic banks (G-SIBs) after the 2008 global financial crisis, mandating that the largest lenders in the world retain an additional buffer of capital calibrated across five "buckets" and face more rigorous operational inspection.
"The 30 banks on the list remain the same as the 2021 list. Within the list, one bank has moved to a higher bucket, Bank of America has moved from bucket 2 to bucket 3," the FSB said in a statement.
JPMorgan led the list in bucket 4, as no bank could meet the capital buffer requirements to make it to the top bucket (bucket 5). Bank of America joined Citigroup and HSBC in bucket 3. Goldman Sachs, Barclays, Deutsche Bank, and others were in bucket 2, while Credit Suisse, Morgan Stanley, and Santander among others were in the lowest bucket.
The changes in capital buffer requirements will apply to each G-SIB from January 1, 2024, FSB said. Cross-border exposures within the banking union of the European Union have been taken into account in the calibration of rankings for European banks this year, the board added. JPMorgan's third-quarter profit dropped 17% to $9.74 billion, or $3.12 per share, while the adjusted profit was $3.36 per share, well above analysts' average estimate of $2.88, according to Refinitiv data.
Driven by higher interest rates, the bank's net interest income jumped 51% to $16.9 billion in the third quarter, with a higher expectation for the current quarter of about $19 billion.
Typically, higher interest rates benefit banks because they increase consumer returns, although the risk of an economic slowdown and higher cost of borrowing presents a challenge to future earnings.
Overall revenue climbed 10% to $32.72 billion, supported by a 22% increase in revenue from fixed-income trading. Investment banking revenue, however, plunged by 43% to $1.7 billion as high inflation and fears of a looming recession negatively affected dealmaking.
The bank's reserves rose to $808 million, compared to $2.1 billion released in the same period last year, following fears of an economic headwind stoked by the recent Fed's interest rate hikes.
