PMorgan Chase Additional Information; Shares up 1% in reaction to earnings; RoE slightly better than expected, Loan Growth at low end of expectations; Reaffirms FY18 NII and Loan Growth outlook
- Average core loans ex-CIB up 6% YoY and 2% QoQ; JPM had guided for loan growth near the hiogh end of the 6-7% range at the Barclays conference
- Expenses were $15.3 bln
- Credit Costs $900 mln
- RoE- 14% compared to 14% in Q2 and 11% in prior year; Stated that they expected it to slip toward 13% at Barclays conference last month.
- RoTCE- 17% compared to 17% in Q2 and 13% in prior year
- Net Interest Rate Yield rises 5 bps to 2.51%, slightly better than expected
- Interest Rate Spread 2.24%, up 2 bps q/q.
- Tangible Book Value per Share $55.68
- Credit card sales up 12% YoY; merchant processing volume up 14% YoY; reserve build of $150mm this quarter vs. a $300mm build in 3Q17
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IB revenue of $1.7B, flat YoY
- Markets revenue of $4.4B, down 2% YoY, or up 1% YoY excluding the impact of tax reform, slightly better than $4.38 bln expectations
- Fixed Income Markets revenue of $2.8B, down 10% YoY, or down 6% YoY excluding the impact of tax reform; Expectations were for approx $2.96 bln
- Equity Markets revenue of $1.6B, up 17% YoY, with higher revenue across products, reflecting strong client activity; Expectations were for approx $1.42 bln.
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Commercial Banking
- Average loan balances of $207B, up 4% YoY and 1% QoQ
- C&I up 4% YoY and flat QoQ
- CRE up 3% YoY and up 1% QoQ
- Average client deposits of $168B, down 5% YoY
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Outlook
- Reaffirmed FY2018 net interest income to be $55.5B+/-, market dependent;
- Expect FY2018 noninterest revenue growth of 7-8%, market dependent
- Reaffirmed FY2018 adjusted expense of $63.5B+/-
- Expect FY2018 effective income tax rate to be ~20%
- Reaffirmed FY2018 average core loan growth of 6-7%, excluding CIB loans