JPMorgan Chase (NYSE:JPM) is the largest bank in the United States by total assets and one of the five
largest banks on the planet. Shares of JPMorgan have dropped 28% in 2022 as of close on October 20.
The stock is now down 31% in the year-over-year period. Is this top bank stock worth buying on the dip
in late October? Let’s jump in.
The bank released its third quarter fiscal 2022 earnings on October 14. It delivered total revenues of
US$33.4 billion, which beat analyst expectations. Revenues posted 10% growth on the back of higher
interest rates, bolstering profit margins. JPMorgan also expanded its loan book. Meanwhile, net
earnings per share came in at US$9.74 billion or US$3.12 per share – down 17% from the prior year.
That was largely due to reserves put away for bad loans. Regardless, this still beat analyst expectations.
Despite the better-than-expected earnings report, JPMorgan warned of significant headwinds in the
quarters ahead. If U.S. unemployment levels rise to 5% to 6%, the bank predicts that it would be forced
to increase loan loss reserves by roughly US$5 billion to US$6 billion.
Shares of JPMorgan currently possess a favourable price-to-earnings ratio of 9.8. Moreover, it offers a
quarterly dividend of US$1.00 per share. That represents a 3.4% yield. JPMorgan offers nice value right
now, but I’m still taking a cautious approach in this volatile market. Bank stocks may have further to fall
as the odds of a recession increase in late 2022.
