JPMorgan Q3 Earnings Beat: Robust Consumer & Community Banking, Credit Losses Dip, Outlook Revised & More

JPMorgan Chase & Co JPM reported Q3 net revenue (managed) of $40.7 billion, up 21% Y/Y, beating the consensus of $39.57 billion.

Reported revenue was $39.87 billion in the quarter, up 22% Y/Y.

Consumer & Community Banking revenue increased 29% Y/Y to $18.4 billion, Corporate & Investment Banking was $11.7 billion (-2% Y/Y), and Commercial Banking was $4.0 billion (+32% Y/Y). Investment Banking fees were down 3% Y/Y due to lower advisory fees. 

Asset and Wealth Management revenue was $5.0 billion (+10% Y/Y), and Corporate revenue of $1.6 billion included net investment securities losses of $669 million.

Noninterest revenue was $17.8 billion, up 12% Y/Y, or 8% Y/Y excluding First Republic, driven by higher CIB Markets noninterest revenue, higher asset management fees, and lower net investment securities losses.

Net interest income increased by 30% Y/Y to $22.9 billion and +21% Y/Y, excluding First Republic.

Noninterest expense was $21.8 billion, up 13% Y/Y, or +9% Y/Y, excluding First Republic.

Average loans were up 17%, and average deposits were down 4% for the quarter.

Debit and credit card sales volume increased by 8% Y/Y, and Active mobile customers were up 9% Y/Y.

JPM's Q3 provision for credit losses was $1.4 billion (-10% Y/Y), including net charge-offs of $1.5 billion and a net reserve release of $113 million.

EPS was $4.33, beating the consensus of $3.96. ROTCE was 22%.

Assets under management (AUM) stood at $3.2 trillion (+22% Y/Y), and client assets stood at $4.6 trillion (+21% Y/Y), driven by continued net inflows and higher market levels. 

CET1 capital ratio stood at 14.3% and the advanced CET1 capital ratio was 14.5%, with a total loss-absorbing capacity of $496 billion.

Jamie Dimon, Chairman, and CEO said, "Currently, U.S. consumers and businesses generally remain healthy, although, consumers are spending down their excess cash buffers. However, persistently tight labor markets as well as extremely high government debt levels with the largest peacetime fiscal deficits ever are increasing the risks that inflation remains elevated and that interest rates rise further from here."

"Additionally, we still do not know the longer-term consequences of quantitative tightening, which reduces liquidity in the system at a time when market-making capabilities are increasingly limited by regulations. Furthermore, the war in Ukraine compounded by last week’s attacks on Israel may have far-reaching impacts on energy and food markets, global trade, and geopolitical relationships. This may be the most dangerous time the world has seen in decades."

Outlook FY23: JPMorgan expects net interest income excluding Markets of ~$89 billion (vs. ~$87 billion earlier). It now anticipates card services NCO rate of about 2.50% (vs. 2.60% prior).

Price Action: JPM shares are trading higher by 1.33% at $147.75 premarket on the last check Friday.