JPMorgan Chase & Co. JPM shares are trading lower after it reported second-quarter FY24 results.
Reported revenue rose 22% Y/Y to $50.2 billion, beating the consensus of $42.3 billion. Net revenue (managed) stood at $51.0 billion (+20% Y/Y) in the quarter.
Consumer & Community Banking (CCB) revenue increased 3% Y/Y to $17.7 billion, and Commercial & Investment Banking was $17.9 billion (+9% Y/Y) in the quarter.
Investment Banking revenue was $2.5 billion, up 46%. Investment Banking fees were up 50% Y/Y, led by higher fees across all products. Asset and Wealth Management (AWM) revenue was $5.3 billion (+6% Y/Y), and Corporate revenue stood at $10.1 billion in the quarter.
In AWM, Assets under management (AUM) stood at $3.7 trillion (+15%), and client assets stood at $5.4 trillion (+18%), driven by higher market levels and continued net inflows.
Net interest income increased by 4% Y/Y to $22.9 billion and +3% Y/Y, excluding Markets. Noninterest revenue was $28.1 billion, up 37% Y/Y, in the quarter.
Excluding the $7.9 billion net gain related to Visa Inc. V shares and the estimated bargain purchase gain associated with First Republic of $2.7 billion in the prior-year quarter, noninterest revenue grew 14% year over year.
Noninterest expense was $23.7 billion, up 14% Y/Y in the quarter. Average loans were up 6%, including First Republic, flat Q/Q; average deposits were down 1%, or flat Q/Q.
Related: JPMorgan’s Lake Aims High, Bank Targets 15% Share of Consumer Deposits: Report
In CCB, Debit and credit card sales volume increased by 7% Y/Y, and active mobile customers were up 7% Y/Y.
In CIB, Markets revenue rose 10% Y/Y, with Fixed Income Markets growing 5% Y/Y and Equity Markets up 21% Y/Y in the quarter.
JPM’s provision for credit losses was $3.05 billion (+5% Y/Y), including net charge-offs of $2.2 billion and a net reserve release of $821 million.
Net income rose 25% Y/Y to $18.1 billion, including a $7.9 billion net gain related to Visa shares and a $1.0 billion donation of Visa shares to pre-fund contributions to the Firm’s Foundation.
Adjusted EPS of $4.40, exceeding the consensus of $4.19.
The CET1 capital ratio stood at 15.3%, and the advanced CET1 capital ratio was 15.5%, with a total loss-absorbing capacity of $534 billion.
Outlook FY24: JPMorgan now expects net interest income, excluding Markets, of ~$91 billion. The bank now anticipates card services NCO rate of ~3.40%.
Jamie Dimon, Chairman and CEO, said, “While market valuations and credit spreads seem to reflect a rather benign economic outlook, we continue to be vigilant about potential tail risks. These tail risks are the same ones that we have mentioned before. The geopolitical situation remains complex and potentially the most dangerous since World War II — though its outcome and effect on the global economy remain unknown.”
“Next, there has been some progress bringing inflation down, but there are still multiple inflationary forces in front of us: large fiscal deficits, infrastructure needs, restructuring of trade and remilitarization of the world. Therefore, inflation and interest rates may stay higher than the market expects.”
Investors can gain exposure to the stock via IShares U.S. Financial Services ETF IYG and SPDR Select Sector Fund – Financial XLF.
Also Read: JP Morgan’s Chief Market Strategist Kolanovic Departs Amid Contrarian Views On US Equities: Report
Price Action: JPM shares are down 0.65% at $206.50 premarket at the last check Friday.
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