JPMorgan Chase beats by $0.24 on GAAP EPS; beats on rev
- Co reported GAAP EPS of $6.12, $0.24 better than the $5.88 GAAP FactSet consensus; reported revs +22% yr/yr to $50.8 bln vs. $42.23 bln FactSet consensus.
- Net interest income ("NII") was $22.9 billion, up 4%. NII excluding Markets2 was $22.9 billion, up 3%, driven by the impact of balance sheet mix and higher rates, higher revolving balances in Card Services and one additional month of First Republic-related net interest income, largely offset by deposit margin compression across the LOBs and lower deposit balances in CCB. Noninterest revenue was $28.1 billion, up 37%. Excluding the $7.9 billion net gain related to Visa shares, as well as the estimated bargain purchase gain associated with First Republic of $2.7 billion in the prior-year quarter, noninterest revenue was up 14%, predominantly driven by higher investment banking fees, asset management fees and CIB Markets noninterest revenue. The current and prior-year quarters included net investment securities losses.
- The provision for credit losses was $3.1 billion, reflecting net charge-offs of $2.2 billion and a net reserve build of $821 million. Net charge-offs of $2.2 billion were up $820 million, predominantly driven by Card Services. The net reserve build included $609 million in Consumer, primarily in Card Services, and $189 million in Wholesale. The prior-year provision was $2.9 billion, reflecting a net reserve build of $1.5 billion, predominantly associated with First Republic, as well as net charge-offs of $1.4 billion.
- Markets & Securities Services revenue was $9.0 billion, up 8%. Markets revenue was $7.8 billion, up 10%. Fixed Income Markets revenue was $4.8 billion, up 5%, largely driven by Securitized Products. Equity Markets revenue was $3.0 billion, up 21%, driven by strong performance in Equity Derivatives and Prime. Securities Services revenue was $1.3 billion, up 3%, driven by higher volumes and market levels, largely offset by deposit margin compression.
- Dimon said: "While market valuations and credit spreads seem to reflect a rather benign economic outlook, we continue to be vigilant about potential tail risks. These tail risks are the same ones that we have mentioned before. The geopolitical situation remains complex and potentially the most dangerous since World War II — though its outcome and effect on the global economy remain unknown. Next, there has been some progress bringing inflation down, but there are still multiple inflationary forces in front of us: large fiscal deficits, infrastructure needs, restructuring of trade and remilitarization of the world. Therefore, inflation and interest rates may stay higher than the market expects. And finally, we still do not know the full effects of quantitative tightening on this scale."