Q124 JPM earnings

earnings summary

Here is a summary of the key points from JPMorgan Chase’s Q1 2024 earnings call transcript, with an emphasis on earnings results, guidance, trends, and sentiment:

Earnings Results:

• JPMorgan reported net income of $13.4B, EPS of $4.44, and ROTCE of 21%. This included a $725M increase to the FDIC special assessment from recent bank closures.
• Excluding First Republic Bank, revenue was $40.9B, up 4% YoY. NII ex-Markets rose 4% while NIR ex-Markets increased 12%. Markets revenue fell 5%.
• Expenses of $22B rose 9% YoY on higher compensation and FDIC assessment. Credit costs were $1.9B.

Guidance:

• Management now expects 2024 NII ex-Markets of ~$89B and adjusted expense of ~$91B. They affirmed the outlook for <3.5% card NCO rate.
• The effective tax rate has increased to ~23% going forward but with no net income impact.

Themes/Trends:

• Consumer spend is flattening but still healthy, with some substitution to non-discretionary categories. Lower income cohorts are seeing spend slowdown as pandemic-era excess savings normalize.
• Ongoing migration of consumer deposits from checking/savings to CDs is compressing deposit margins. This trend is expected to continue even if rates are cut.
• Investment banking pipelines are improving, but 1Q strength may have pulled forward some activity from later in the year. M&A faces regulatory headwinds.
• Wholesale payments is gaining share and benefiting from tech investments and a relatively resilient business model.

Sentiment: The tone of the call was cautiously optimistic. Management is pleased with JPMorgan’s performance and market share gains. However, they remain vigilant about economic uncertainty and geopolitical risks that could change the operating environment. The bank is maintaining strong capital ratios in preparation for potential challenges. Overall, JPMorgan appears well-positioned to navigate the evolving landscape from a position of strength.