JPMorgan Q4 Earnings Shine, Sees Strong FY24 NII But Warns Of Potential Risks

JPMorgan Chase & Co JPM shares are trading higher after it reported Q4 net revenue (managed) of $39.943 billion, up 12% Y/Y, beating the consensus of $39.778 billion.

Reported revenue was $38.6 billion in the quarter, up 12% Y/Y. Consumer & Community Banking (CCB) revenue increased 15% Y/Y to $18.1 billion, Corporate & Investment Banking was $11.0 billion (+3% Y/Y), and Commercial Banking was $4.0 billion (+18% Y/Y). 

Investment Banking fees were up 13% Y/Y, led by higher debt and equity underwriting fees. Asset and Wealth Management revenue was $5.1 billion (+11% Y/Y), and Corporate revenue stood at $1.8 billion in Q4.

Noninterest revenue was $15.8 billion, up 3% Y/Y, or flat Y/Y excluding First Republic, driven by higher asset management and Investment Banking fees.

Net interest income increased by 19% Y/Y to $24.2 billion and +12% Y/Y, excluding First Republic. Noninterest expense was $24.5 billion, up 29% Y/Y, or +24% Y/Y, excluding First Republic.

Average loans were up 17%, or up 4% excluding First Republic; average deposits were flat, or down 3% excluding First Republic.

In CCB, Debit and credit card sales volume increased by 7% Y/Y, and Active mobile customers were up 8% Y/Y. EPS was $3.97, beating the consensus of $3.32. 

JPM’s Q4 provision for credit losses was $2.8 billion (+21% Y/Y), including net charge-offs of $2.2 billion and a net reserve build of $598 million. 

In AWM, Assets under management (AUM) stood at $3.4 trillion (+24% Y/Y), and client assets stood at $5.0 trillion (+24% Y/Y), driven by continued net inflows and higher market levels. 

CET1 capital ratio stood at 15.0%, and the advanced CET1 capital ratio was 15.0%, with a total loss-absorbing capacity of $514 billion.

Outlook FY24: JPMorgan expects net interest income, excluding Markets, of ~$88 billion as loan growth is expected to partly offset lower rates impact. The bank anticipates card services NCO rate of <3.50%.

Jamie Dimon, Chairman and CEO said, “It is important to note that the economy is being fueled by large amounts of government deficit spending and past stimulus. There is also an ongoing need for increased spending due to the green economy, the restructuring of global supply chains, higher military spending and rising healthcare costs. This may lead inflation to be stickier and rates to be higher than markets expect. On top of this, there are a number of downside risks to watch.”

“Quantitative tightening is draining over $900 billion of liquidity from the system annually, and we have never seen a full cycle of tightening. And the ongoing wars in Ukraine and the Middle East have the potential to disrupt energy and food markets, migration, and military and economic relationships, in addition to their dreadful human cost.”

Also Read: JPMorgan Gears Up For Q4 Print; Here’s A Look At Recent Price Target Changes By The Most Accurate Analysts

Price Action: JPM shares are trading higher by 2.06% at $173.80 premarket on the last check Friday.

Photo by Can Pac Swire via Flickr