‘Sigh of relief’ for Labour as UK economy returns to growth; BlackRock hits $11.5tn of assets – business live

JP Morgan chief Jamie Dimon also tells shareholders that the geopolitical situation is ‘getting worse’, while the US economy faces several critical problems.

Presenting today’s financial results, Dimon says:

“We have been closely monitoring the geopolitical situation for some time, and recent events show that conditions are treacherous and getting worse.

There is significant human suffering, and the outcome of these situations could have far-reaching effects on both short-term economic outcomes and more importantly on the course of history.

Additionally, while inflation is slowing and the U.S. economy remains resilient, several critical issues remain, including large fiscal deficits, infrastructure needs, restructuring of trade and remilitarization of the world. While we hope for the best, these events and the prevailing uncertainty demonstrate why we must be prepared for any environment.”

Just in: Profits at Wall Street giant JP Morgan Chase have dropped, as it puts aside more money to cover bad debts.

JP Morgan has just kicked off the US bank reporting season by reporting net income of $12.9bn for the third quarter of 2024. That’s down from $13.15bn a year earlier, and $18.15bn in April-June.

The bank has set aside $3.1bn to cover credit losses, including $2.1bn of bad debts in the quarter and $1bn of reserves to cover future losses.

Revenues grew 6% in the quarter.

Jamie Dimon, Chairman and CEO, says:

“The Firm reported strong underlying business and financial results in the third quarter, generating net income of $12.9 billion and an ROTCE [Return on tangible common equity] of 19%.

In the CIB [investment bank], investment banking fees grew 31%, while Markets revenue was resilient, rising 8%. Payments fees grew by double-digits as investments are fueling organic growth.

In CCB [Consumer & Community Banking], we ranked #1 in U.S. retail deposits for the fourth consecutive year. Card loans increased 11%, and we saw robust acquisition of 2.5 million accounts.

Finally, in AWM [asset and wealth management], asset management fees rose 15%, and long-term net inflows were a record $72 billion.

Oof! BlackRock, the world’s largest money manager, has grown its assets under management to a new alltime high of $11.5 trillion.

Its latest financial results, just released, show that BlackRock pulled even more money from investors in the last quarter, and the last year, while the value of what it already owns rose.

Assets under management (AUM) rose by $2.4 trillion year-over-year, BlackRock reports, driven by $456 billion of net inflows and “positive market movements”.

Quite astonishing numbers really.

Laurence D. Fink, Chairman and CEO of BlackRock, says:

“Our strategy is ambitious, and our strategy is working. The assets we manage on behalf of our clients reached a new high, ending the third quarter at $11.5 trillion, having grown $2.4 trillion over the last twelve months.

In that time, clients have entrusted BlackRock with $456 billion of net inflows, including a record $221 billion in the third quarter. Third quarter organic base fee growth of 5% and technology services ACV [annual contract value] growth of 15% are each at multi-year highs.

Although the UK economy grew in August, it has lost momentum compared with the first half of this year (when growth was recovering after the small recession in 2023).

Gabriella Dickens, G7 economist at AXA Investment Managers, says:

The latest activity data showed the UK returned to growth in August, which will be somewhat of a relief to the Bank of England after two consecutive months of stagnation.

GDP showed a month-to-month increase of 0.2% in August, in line with ours and markets’ expectations, on the back of strength in the manufacturing and construction sectors.

The overall picture, though, is that momentum is easing. Indeed, on a three-month-on-three-month basis, growth slowed to just 0.2% in August, compared to downwardly revised 0.3% in July. Furthermore, over Q3, it is on track to post 0.2%, compared to 0.5% in Q2.

The UK economy returned to growth in August after flatlining for two months, in a boost for the chancellor, Rachel Reeves, before the autumn budget, my colleague Richard Partington writes.

The Office for National Statistics (ONS) said gross domestic product rose by 0.2% in August, after zero growth in June and July. The reading matched the forecasts of City economists.

Liz McKeown, an ONS director of economic statistics, said:

“All main sectors of the economy grew in August, but the broader picture is one of slowing growth in recent months, compared with the first half of the year.

“In August, accountancy, retail and many manufacturers had strong months, while construction also recovered from July’s contraction. These were partially offset by falls in wholesaling and oil extraction.”

Growth over the broader three months to the end of August also rose by 0.2%. The rate of expansion is slower than in the first two quarters of 2024, when the economy grew by 0.7% and 0.5% respectively after exiting a shallow recession at the end of 2023.

Reeves has promised to use Labour’s first budget in more than a decade to reboot economic growth, with a plan to prioritise investment, alongside measures to increase household incomes and repair crumbling public services. However, she has also warned that tough decisions will be required to balance the books.

The chancellor said the government would next week host its global investment summit to encourage the world’s biggest businesses to spend in Britain to bring jobs and activity to every part of the country.

The return of the UK economy to growth means a UK interest rate cut as soon as November isn’t certain, argues Suren Thiru, ICAEW economics director.

Following today’s GDP data showing the economy grew by 0.2% in August, Thiru says:

“These figures confirm a reassuring rally in output, as easing inflation and better weather helped return the economy to growth by reviving activity in key sectors, including retail and manufacturing.

“August’s uptick is unlikely to have prevented a slowdown in GDP growth across the third quarter, as lower business and consumer confidence may well have squeezed activity in September.

“The UK economy could blow a bit hot and cold over the near term, as the lift to incomes from muted inflation is hindered by growing consumer and business caution amid global geopolitical uncertainty and probable tax hikes.

“While interest rates are still likely to fall in November, these positive figures mean it’s not quite a done deal by giving the more hawkish rate setters enough encouragement over economic conditions to hold off voting to relax policy.”

The money markets are indicating there’s an 80% chance that the Bank of England cuts rates to 4.75% in November, down from 5% today.

Chancellor Rachel Reeves has welcomed the news that growth has returned to the economy.

“Growing the economy is the number one priority of this Government so we can fix the NHS, rebuild Britain and make working people better-off.

“While change will not happen overnight, we are not wasting any time on delivering on the promise of change.

“Next week, hundreds of the world’s biggest businesses will come to Britain as we deliver on our promise to bring investment, growth and jobs back to every part of the country.”