JPMorgan Chase Q3 Earnings: Investment Banking Revenue Soars 29%, Largest Bank Raises Net Interest Income Outlook

JPMorgan Chase & Co. JPM shares are trading higher premarket after it reported third-quarter FY24 results.

Reported revenue rose 7% year-on-year to $42.654 billion, beating the consensus of $41.649 billion. Net revenue (managed) stood at $43.3 billion (+6% Y/Y) in the quarter.

Consumer & Community Banking (CCB) revenue declined 3% Y/Y to $17.791 billion, and Commercial & Investment Banking was $17.015 billion (+8% Y/Y) in the quarter.

Also Read: JPMorgan Earnings Are Imminent; These Most Accurate Analysts Revise Forecasts Ahead Of Earnings Call

Investment Banking revenue was $2.4 billion, up 29%. Investment Banking fees rose 31% year over year, led by higher fees across all products.

Asset and Wealth Management (AWM) revenue was $5.4 billion (+9% Y/Y), and Corporate revenue stood at $3.07 billion (+97% Y/Y) in the quarter.

In AWM, Assets under management (AUM) stood at $3.9 trillion, and, client assets stood at $5.7 trillion (up 23%), driven by higher market levels and continued net inflows.

Net interest income increased by 3% Y/Y to $23.5 billion and +1% Y/Y, excluding Markets. Noninterest revenue was $19.8 billion, up 11% Y/Y, in the quarter.

Noninterest revenue, excluding Markets, rose 17% to $12.7 billion, fueled by lower net investment securities losses, higher asset management fees in AWM and CCB, and increased investment banking fees.

Noninterest expense increased 4% to $22.6 billion, mainly due to higher compensation and employee growth. Average loans rose 1% Y/Y and Q/Q; average deposits were up 1% Y/Y and Q/Q.

In CCB, Debit and credit card sales volume increased by 6% year over year, and active mobile customers were up 7% year over year. In CIB, Market revenue rose 8% year over year, with Fixed Income Markets flat year over year and Equity Markets up 27% year over year in the quarter.

JPM's provision for credit losses was $3.11 billion (+125% Y/Y), including net charge-offs of $2.1 billion and a net reserve build of $1.0 billion. 

Net income fell 2% Y/Y to $12.90 billion in the quarter. EPS of $4.37, exceeding the consensus of $4.00.

The CET1 capital ratio stood at 15.3%, and the advanced CET1 capital ratio was 15.5%. The bank disclosed a dividend per share of $1.25 and a share repurchase of $6.0 billion.

Outlook: JPMorgan now expects FY24 net interest income, excluding Markets, of ~$92.5 billion (up from ~$91 billion earlier). The bank continues to project card services NCO rate of ~3.40%.

Jamie Dimon, Chairman and CEO, said, "We await our regulators' new rules on the Basel III endgame and the G-SIB surcharge as well as any adjustments to the SCB or CCAR…Regardless of the outcome of these rules, we have an extraordinarily strong balance sheet, evidenced by total loss-absorbing capacity of $544 billion plus cash and marketable securities of $1.5 trillion, while our riskiest assets, loans, total $1.3 trillion."

"On share repurchases, given that market levels are at least slightly inflated, we maintain our modest pace of buybacks, although we reserve the right to adjust this at any time."

"We have been closely monitoring the geopolitical situation for some time, and recent events show that conditions are treacherous and getting worse."

"Additionally, while inflation is slowing and the U.S. economy remains resilient, several critical issues remain, including large fiscal deficits, infrastructure needs, restructuring of trade and remilitarization of the world."

Investors can gain exposure to the stock via IShares U.S. Financial Services ETF IYG and SPDR Select Sector Fund – Financial XLF.

Price Action: JPM shares are up 1.39% at $215.79 premarket at the last check Friday.

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