JPMorgan Chase (JPM) earnings in the first quarter of 2024

JPMorgan Chase on Friday posted earnings and revenue that beat Wall Street estimates as credit costs and trading revenue came in better than expected.

Here's what the company reported compared to estimates from analysts surveyed by LSEG, formerly known as Refinitiv:

  • Earnings: $4.44 per share, versus $4.11 expected
  • Revenue: $42.55 billion, versus $41.85 billion expected

The bank said first-quarter earnings rose 6% to $13.42 billion, or $4.44 per share, from a year earlier, boosted by its acquisition of First Republic during last year's regional banking crisis. Earnings per share would have been 19 cents higher excluding a $725 million increase to an FDIC fee that covers the costs of last year's bank failures.

Revenue rose 8% to $42.55 billion as the bank generated more interest income thanks to higher rates and larger loan balances.

But as a guide to 2024, the bank said it expected net interest income of around $90 billion, essentially unchanged from its previous forecast.

That appeared to disappoint investors, some of whom had expected JPMorgan to raise its guidance by $2 billion to $3 billion for the year. JPMorgan shares fell more than 6% on Friday.

While NII's forecasts “seem ultra-conservative to us (and now leave room to revise upwards later), we suspect the unchanged outlook will disappoint investors,” Piper Sandler analyst Scott Siefers said in a note on Friday.

JPMorgan posted a provision of $1.88 billion for credit losses in the quarter, well below the $2.7 billion expected by analysts. The provision was 17% lower than a year ago, as the company released some reserves for credit losses, rather than building them up as it did a year earlier.

While overall trading revenue was down 5% from a year ago, fixed income and equity results beat analyst expectations by more than $100 million each, coming in at $5.3 billion and $2.7 billion. dollars, respectively.

JPMorgan CEO Jamie Dimon called his company's results “strong” in the institutional and consumer areas, helped by a still-buoyant U.S. economy, although he struck a cautious note about the future.

“Many economic indicators remain favorable,” Dimon said. “Looking ahead, however, we remain alert to a number of important uncertain forces,” including overseas conflicts and inflationary pressures.

Although the largest U.S. bank by assets has navigated the rate environment well since the Federal Reserve began raising rates two years ago, its smaller peers have seen their profits shrink.

The industry has been forced to pay for deposits as clients shift cash into higher-yielding instruments, squeezing margins. Concerns are also growing about rising commercial loan losses, especially in office buildings and multifamily housing, and rising credit card defaults.

When asked about commercial real estate during a media call Friday, Chief Financial Officer Jeremy Barnum said that while JPMorgan built up its reserves last year for this asset class, he saw no signs of improvement.

“Especially in office, the story is well known, and as far as we can see, it's not getting any better,” Barnum said. “As far as we can see, there is no light at the end of the tunnel.”

This quarter, large banks are expected to outperform smaller banks, which tend to have greater exposure to the commercial real estate sector.

Wells Fargo and citi group also reported quarterly results on Friday, while Goldman Sachs, Bank of America and Morgan Stanley report next week.

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