JPMorgan Chase beats by $0.10, misses on revs
Reports Q2 (Jun) earnings of $1.54 per share, $0.10 better than the Capital IQ Consensus Estimate of $1.44; revenues fell 3.5% year/year to $23.81 bln vs the $24.31 bln consensus. Net revenue on a U.S. GAAP basis totaled $23.8 billion, $24.1 billion, and $24.7 billion for the second quarter of 2015, first quarter of 2015, and second quarter of 2014, respectively. Net revenue Non-GAAP was $24.5 billion, down 3%, driven by lower Mortgage Banking revenue and lower CIB Markets revenue related to business simplification, partially offset by growth in Asset Management
- Core loans up 12% YoY and 5% QoQ.
- Tangible book value per share of $46.13, up 7% YoY
- Basel III common equity Tier 1 of $169 billion; ratio of 11.0%
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Firm SLR of 6.0% and Bank SLR of 6.1%.
- Net revenue was $8.7 billion, a decrease of 6%. Banking revenue was $2.9 billion, down 3%, reflecting lower Lending revenue due to losses on securities received from restructurings.
- Investment banking revenue was up 4% on higher advisory fees and higher debt underwriting fees, partially offset by lower equity underwriting fees compared to a strong quarter for equity underwriting in the prior year.
- Treasury Services revenue was $901 million, down 2%, driven by lower net interest income largely offset by noninterest revenue. Markets & Investor Services revenue was $5.8 billion, down 7%. Excluding the revenue decline related to business simplification and the Markit IPO gain in the second quarter of 2014, Total Markets revenue would have been down 1%, and Fixed Income Markets revenue would have been down 10%. This was driven by continued weakness in Credit and Securitized Products, as well as lower revenue in Currencies & Emerging Markets, partially offset by strength in Rates. Equity Markets revenue was up 27% driven by strong performance across derivatives and case.
Additional Information and Outlook
- RoE 11%, Q1 11%, prior year 11%.
- Firm NIM up 2 bps QoQ to 2.09%, primarily driven by lower cash balances and higher loan balances, largely offset by lower loan yields.
- Firm NII flat QoQ.
- Mortgage originations of $29.3B, up 74% YoY and 19% QoQ.
- Fixed Income Markets of $2.9B, down 10%6 YoY, excluding business simplification and gain from the Markit IPO in 2Q14, primarily driven by continued weakness in Credit and Securitized Products as well as lower revenue in Currencies & Emerging Markets
- Equity Markets of $1.6B, up 27% YoY, with strength across derivatives and cash;
- Expense of $5.1B, down 15% YoY, driven by business simplification, lower legal expense and lower compensation expense.
- Firmwide
- Expect YoY core loan growth to continue at 10%+/-
- Expect 2H15 NCOs to be consistent with 1H15
- Expect FY2015 adjusted expense2 of $57B+/-.
- C&CB
- Expect Mortgage Banking noninterest revenue for FY2015 to be down ~$1B YoY on lower servicing revenue as well as lower repurchase benefits
- Expect Card Services revenue rate in 2015 to remain at the low end of the target range of 12-12.5%
- Expect Card Services FY2015 NCO rate to be slightly less than 2.5%.
- CIB
- For 3Q15, expect business simplification to generate YoY negative variance in Markets revenue of 9%, with an associated reduction in expense
- Expect Treasury Services revenue to be $875mm+/- in each of the remaining quarters of 2015 as a result of transfer of Trade Finance revenues to Lending
- Expect Securities Services revenue to be $950mm-$1B in each of the remaining quarters of 2015, depending on seasonality