JPMorgan Chase released its third-quarter earnings report, and there are several key takeaways to consider. Firstly, the bank’s provision for loan losses was significantly lower than expected, driven by a $205 million reserve release despite 1.2% quarter-over-quarter loan growth, which was in line with consensus. This led to a roughly 20% core earnings per share (EPS) beat. Additionally, the bank’s common equity tier 1 (CET1) capital ratio ended the quarter at 13.8%, a 10 basis points (bps) increase from the previous quarter and 24 bps above consensus.

Marketing expenses were down 8.5% year-over-year (YoY) versus expectations, and the bank is guiding for a similar increase in the fourth quarter. DFS loans are expected to continue contracting for only a few more quarters. The bank also introduced a new earnings power framework, which takes into account seasonality and reserve releases, and is now adjusting for these factors. Based on this framework, the bank expects returns in the range of 20% to slightly below that level, depending on how one cuts it.

In terms of operating income, the bank’s investment banking division delivered a 4% beat, while net interest income (NII) was roughly in line. However, there was significant weakness in the institutional brokerage unit, with revenue down 11% quarter-over-quarter (QoQ) and 33% year-over-year (YoY). Deposit mix was a major focus, as total deposits looked okay, but core brokerage deposits (the bank’s cheapest source of funding) were down 11% QoQ. The bank continues to raise institutional deposits, but this may impact margin expansion going forward.