JPMorgan Chase beats by $0.19, beats on revs
- Reports Q3 (Sep) earnings of $1.58 per share, $0.19 better than the Capital IQ Consensus of $1.39; revenues rose 8.3% year/year to $24.7 bln vs the $23.69 bln Capital IQ Consensus. Net income ($6.29 bln -8% Y/Y +1% Q/Q) reflects higher income tax expense in the current quarter. Net interest income was $11.9 bln, up 6%, primarily driven by loan growth and the net impact of higher rates, partially offset by lower investment securities balances. Noninterest revenue was $13.6 bln, up 10%, primarily driven by the Corporate & Investment Bank. Noninterest expense was $14.5 bln, down 6%, driven by lower legal expense, partially offset by higher compensation expense.
- The provision for credit losses was $1.3 bln, up from $682 mln, due to reserve increases in the current quarter vs. reserve releases in the prior-year quarter, and higher net charge-offs. The Consumer provision reflected an increase in reserves of ~$225 mln, primarily driven by growth in the Card portfolio, including growth in newer vintages which, as expected, have higher loss rates compared to the overall portfolio. The Wholesale provision was a benefit, primarily driven by net reserve releases in the Oil & Gas portfolio of ~$50 mln.
- ROE +13% (tangible common).
- Average core loans up 15% YoY and 2% QoQ.
- Tangible book value per share of $51.23, up 8%.
- Consumer & Community Bank: Net income was $2.2 bln, a decrease of 16%. Average core loans up 19%. Net revenue was $11.3 bln, up 4% over the prior year. Consumer & Business Banking net revenue was $4.7 bln, up 4%, reflecting strong deposit growth, partially offset by spread compression. Mortgage Banking net revenue was $1.9 bln, up 21%, driven by higher MSR risk management results, higher production margins, and portfolio growth. Card, Commerce Solutions & Auto net revenue was $4.7 bln, down 1%, driven by new account origination costs, an increase in the reserve for uncollectible interest and fees, and the impact of renegotiated card co-brand partnership agreements, predominantly offset by higher auto lease and card sales volumes and higher loan balances.
- Corp. & IB: Net income was $2.9 bln, up $1.4 bln, reflecting higher net revenue and lower legal expense. Banking revenue was $2.9 bln, up 6%, driven by higher Investment Banking revenue, up 14%, reflecting higher debt and equity underwriting fees as well as higher advisory fees. The business continued to rank #1 in Global Investment Banking fees. Treasury Services revenue was $917 mln, up 2%. Lending revenue was $283 mln, down 15%.
- Commercial Bank: Net income was $778 mln, an increase of 50%. Net revenue was $1.9 bln, up 14%, driven by higher net interest income due to loan growth and higher deposit spreads, and higher investment banking revenue driven by large transactions. Average loan balances up 14%; C&I loans up 10%; CRE loans up 19%.
- Asset Mgmt: Net income was $557 mln, an increase of 17%. Net revenue was $3.0 bln, an increase of 5%, driven by higher net interest income due to higher deposit and loan spreads, and loan growth.