Michael M. Santiago
JPMorgan Chase (NYSE:JPM) stock rose 2.7% in Friday premarket after Q2 earnings topped the Wall Street consensus and the U.S.'s largest bank increased its guidance for year net interest income.
While most of its businesses contributed to Q2 earnings growth, Consumer & Community Banking and Commercial Banking units turned in particularly strong results.
The U.S.'s largest bank acquired First Republic Bank during the quarter, helping to calm the banking stresses that emerged in March.
"Even after the First Republic transaction, we maintained an extraordinarily strong CET1 capital ratio of 13.8% and had $1.4 trillion in cash and marketable securities," said Chairman and CEO Jamie Dimon.
For the full year, JPMorgan (JPM) said it expects total net interest income, excluding Corporate & Investment Bank, of ~$87B vs. $81B in the outlook it provided in April.
The year's adjusted expense is expected to be ~$84.5B vs. ~$81B in its previous guidance.
JPM expects FY2023 card services net charge-off rate of ~2.60%, the same as its guidance issued in April.
Q2 EPS of $4.37, far higher than the average analyst estimate of $3.80, increased from $4.10 in Q1 2023.
Adjusted revenue of $42.4B, vs. $38.9B consensus, rose from $39.3B in the prior quarter and from $31.6B in the year-ago period.
Q2 noninterest expense was $20.8B vs. $20.1B in Q1 and $18.7B in Q2 2022.
Provision for credit losses was $2.90B vs. Visible Alpha consensus of $2.68B, $2.28B in the prior quarter and $1.10B a year ago.
Net interest income of $21.8B vs. $21.0B Visible Alpha consensus, $20.7B in Q1 and $15.1B in Q2 2022.
Total loans at June 30, 2023, were $1.30T, vs. $1.13T at March 31, 2023. Deposits, at $2.40, rose from $2.38T at the end of Q1.
Overall, Dimon is optimistic about the U.S. economy, even though risks still loom. "The U.S. economy continues to be resilient," he said. "Consumer balance sheets remain healthy, and consumers are spending, albeit a little more slowly. Labor markets have softened somewhat, but job growth remains strong."
Q2 revenue and net income by segment:
- Consumer & Community Banking revenue of $17.2B vs. $16.5B in the prior quarter and $12.6B in the year-ago period; net income of $5.31B vs. $5.24B in Q1 and $3.11B in Q2 2022.
- Corporate & Investment Banking revenue of $12.5B vs. $13.6B in the prior quarter and $12.0B in the year-ago quarter; net income of $4.09B slipped from $4.42B in Q1 and increased from $3.72B in the year-ago period;
- Commercial Banking revenue of $3.99B rose 14% Q/Q and 49% Y/Y; net income of $1.21B fell 10% Q/Q and increased 22% Y/Y;
- Asset & Wealth Management revenue of $4.94B rose 3% Q/Q and 15% Y/Y; net income of $1.23B fell 10% Q/Q and rose 22% Y/Y.
Conference call at 8:30 AM ET.
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