J.P. Morgan (JPM) – Earnings Summary – April 13, 2024
“Many economic indicators continue to be favorable. However, we remain alert to a number of significant uncertain forces. First, the global landscape is unsettling – terrible wars and violence continue to cause suffering, and geopolitical tensions are growing. Second, there seems to be a large number of persistent inflationary pressures, which may likely continue. And finally, we have never truly experienced the full effect of quantitative tightening on this scale. We do not know how these factors will play out, but we must prepare the firm for a wide range of potential environments to ensure that we can consistently be there for clients.” – CEO Jamie Dimon
CEO Jamie Dimon
Results:
- Beat reported revenue estimate by 0.5%.
- Beat $4.16 GAAP EPS estimate by $0.28. A $725 million boost to expected FDIC special assessment charges shaved $0.19 off of GAAP EPS.
- Comfortably beat return on equity & asset (ROE & ROA) estimates.
- Loans and deposits organically grew by 3% Y/Y and 0% Y/Y, respectively.
- Net interest income rose 11% Y/Y (5% organic growth).
Please note that the First Republic acquisition propped up growth through most of 2023 and into this quarter. That deal closed on May 1st, 2023, meaning there will be more inorganic growth for one more partial quarter before things normalize. Separately, Q4 2023 profits were hard hit by an FDIC assessment.
ROTCE = Return on Tangible Common Equity; CET1 = Common Equity Tier 1
Balance Sheet:
- $1.88 billion credit loss provisions vs. $2.76 billion Q/Q & $2.28 billion Y/Y. This included $2 billion in net charge-offs, but a small $72 million reserve release. That hints at credit deterioration potentially moving into the rearview.
- As you can see above, its 15.0% standard CET1 ratio is 200 bps above its 11.5% minimum.
- Dividends rose 15% Y/Y to $1.15.
- Diluted and basic share counts both modestly shrank Y/Y via buybacks.
- Return on assets of 1.36% compares to 1.38% Y/Y.
- Its total capital ratio is 18.2% vs. 17.4% Y/Y.
- Its tier 1 leverage ratio is 7.2% vs. 6.9% Y/Y.
Outlook & Valuation:
The firm raised its net interest income guidance by 2.2% and raised its total expense guidance due to FDIC assessments. It reiterated sub 3.5% card net charge-off rates. The company trades for 12x earnings, with earnings expected to grow by -2.1% Y/Y.
