- Net Income: $13.4 billion.
- Earnings Per Share (EPS): $4.44.
- Revenue: $42.5 billion.
- Return on Tangible Common Equity (ROTCE): 21%.
- Investment Banking (IB) Fees: Up 18% year-on-year.
- Net Interest Income (NII) ex Markets: Up $736 million or 4%.
- Non-Interest Revenue (NIR) ex Markets: Up $1.2 billion or 12%.
- Markets Revenue: Down $400 million or 5% year-on-year.
- Expenses: $22 billion, up $1.8 billion or 9% year-on-year.
- Credit Costs: $1.9 billion.
- Net Charge-Offs: $2 billion.
- Net Reserve Release: $38 million.
- Common Equity Tier 1 (CET1) Ratio: 15%.
- Consumer & Community Banking (CCB) Net Income: $4.4 billion.
- CCB Revenue: $16.6 billion, up 1% year-on-year.
- Corporate & Investment Bank (CIB) Net Income: $4.8 billion.
- CIB Revenue: $13.6 billion.
- Commercial Bank Net Income: $1.6 billion.
- Commercial Bank Revenue: $3.6 billion, up 3% year-on-year.
- Asset & Wealth Management (AWM) Net Income: $1 billion.
- AWM Revenue: $4.7 billion, down 1% year-on-year.
- Corporate Net Income: $918 million.
- Corporate Revenue: $2.3 billion, up $1.3 billion year-on-year.
- 2024 Net Interest Income (NII) ex Markets Guidance: Approximately $89 billion.
- Total NII Guidance: Approximately $90 billion.
- Adjusted Expense Outlook: About $91 billion.
- 2024 Card Net Charge-Off Rate Expectation: Below 3.5%.
- Effective Tax Rate: Around 23% for the year.
Release Date: April 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- JPMorgan Chase & Co (JPM, Financial) reported a net income of $13.4 billion and an EPS of $4.44, indicating strong profitability.
- The firm delivered an ROTCE of 21%, showcasing efficient use of shareholder equity.
- Firm-wide investment banking (IB) fees increased by 18% year-on-year, showing growth in underwriting fees and strong net inflows across Asset & Wealth Management (AWM).
- First Republic contributed positively with $1.7 billion of revenue, $806 million of expense, and $668 million of net income.
- Consumer & Community Banking (CCB) reported net income of $4.4 billion on revenue of $16.6 billion, up 1% year-on-year, indicating resilience in consumer financial health.
Negative Points
- The results included a $725 million increase to the special assessment due to FDIC's updated estimate of expected losses from the closures of Silicon Valley Bank and Signature Bank.
- Markets revenue was down $400 million or 5% year-on-year, reflecting a decrease in trading activity.
- Expenses of $22 billion were up $1.8 billion or 9% year-on-year, driven by higher compensation and the increased FDIC special assessment.
- Net charge-offs were up $116 million predominantly driven by Card, indicating a normalization in credit performance.
- The firm's outlook for adjusted expense is now about $91 billion, reflecting an increase due to the FDIC special assessment, which may impact profitability.
Q & A Highlights
Q: Can you talk through the decision to raise the dividend kind of mid-cycle, pre-CCAR? And also help us understand how you're thinking about where that payout ratio, that dividend payout ratio range should be?
A: (James Dimon - JPMorgan Chase & Co. - Chairman & CEO) We're earning a lot of money, our capital cup runneth over, and that's why we increased the dividend. We'd like to pay out something like 1/3 of normalized earnings. Regarding the 15% CET1 ratio, it prepares us for the total Basel endgame today roughly. We can do a lot of things to change that in the short run or the long run. Basel III endgame may not be the worst case, it will be something less than that. When and if that happens, it would free up a lot of capital. We're continuing to buy back stock at $2 billion a quarter. Excess capital is not wasted capital, it's earnings in store. We will deploy it in a very good way for our shareholders in due course.
Q: Can you speak to the trends you're seeing with respect to deposit migration in the quarter, if there's been any change? Have you seen that migration start to slow or not?
A: (Jeremy Barnum - JPMorgan Chase & Co. - Executive VP & CFO) The migration from checking and savings to CDs is the dominant trend driving the increase in weighted average rate paid in the consumer deposit franchise. We continue to capture that money in motion at a very high rate. There's a narrative about the end of cash-sorting, but we don't think it makes sense to assume that in a world where checking and savings is paying effectively 0 and the policy rate is above 5%, that you're not going to see ongoing migration.
Q: Jeremy, you had mentioned at a conference earlier this year that The Street might need to build in more reserve growth for the Card growth. You've had more reserve build. We didn't see that this quarter. Is that just kind of seasonal? And would you still expect the kind of growth math to play out in terms of Card growth and reserve build needs?
A: (Jeremy Barnum - JPMorgan Chase & Co. - Executive VP & CFO) Yes, the relative lack of build this quarter is a function of the normal seasonal patterns of Card. Yes, we still expect 12% card loan growth for the full year. And yes, that still means that all else equal, we think the consensus for the allowance build for the back 3 quarters is still a little too low if you map it to that expected card loan growth.
Q: Jamie, when you think about the outlook for the economy, would appreciate your thoughts on the health of the customer base, both commercial and consumer.
A: (James Dimon - JPMorgan Chase & Co. - Chairman & CEO) Consumer customers are fine. The unemployment is very low. Home price dropped, stock price dropped. The amount of income they need to service their debt is still kind of low. But the extra money of the lower-income folks is running out -- not running out, but normalizing. And you see credit normalizing a little bit. Businesses are in good shape. Their confidence is up, their order books drop, their profits are up. But what I caution people, these are all the same results of a lot of fiscal spending, a lot of QE, et cetera. And so we don't really know what's going to happen. And I also want to look at the year, look at 2 years or 3 years, all the geopolitical effects and oil and gas and how much fiscal spending will actually take place, our elections, et cetera. So we're in good -- we're okay right now. It does not mean we're okay down the road. And if you look at any inflection point, being okay in the current time is always true. That was true in '72, it was true in any time you've had it. So I'm just on the more cautious side that how people feel, the confidence levels and all that, that doesn't necessarily stop you from having an inflection point. And so everything is okay today, but you've got to be prepared for a range of outcomes, which we are.
Q: Given that your response to Betsy's question is that 15% CET1 today prepares you for Basel III endgame as written. You earn 22% on -- without the FDIC assessment. Ahead of Investor Day, as we think about that 17% through-the-cycle target, if you're at the right capital level per you guys, where are you overearning today?
A: (Jeremy Barnum - JPMorgan Chase & Co. - Executive VP & CFO) We're overearning in deposit margins, especially in consumer. That's sort of why we're expecting sequential declines in NII, why we've talked about compressing deposit margins and increases in weighted average rate paid. That's probably the single biggest source of, let's call it, excess earnings currently. You also heard Jamie say that we're overearning in credit. I mean, wholesale charge-offs have been particularly low, but we have built for that. So in the current run rate, a bit less clear, the extent of what we're earning. And in Card, of course, while charge-offs are now close to normalized, essentially, we did go through an extended period of charge-offs being very low by historical standards, although that was coupled with NII also being low by historical standards. So from a bottom line perspective, it's not entirely clear what the net of that was. But broadly, it's really deposit margin that's the biggest single factor in the overearning narrative.
Q: Jeremy, I was wondering if you could expand a little bit on one of your prepared comments. When you talked about -- we will have hopes and expectations for the Investment Banking pipeline to continue to move along. We obviously saw the good movement in ECM and DCM and the lag in Advisory. Can you just talk about that?
A: (Jeremy Barnum - JPMorgan Chase & Co. - Executive VP & CFO) Dialogue is quite good. A lot of interesting different types of conversations happening with global firms, multinationals, carve-out type things. Dialogue is good. Valuation environment is better, like sort of decent reasons for optimism there. But of course, with ECM, there's always a pipeline dynamic, and conditions were particularly good this quarter. And so we caution a little bit there about pull-forward, which is even more acute, I think, on the DCM side, given that quite a high percentage of the total amount of debt that needed to be refinanced this year has gotten done in the first quarter. So that's a factor. And then the
