10-QPeriod: Q2 FY2016

JPMORGAN CHASE & CO Quarterly Report for Q2 Ended Jun 30, 2016

Filed August 3, 2016For Securities:JPMJPM-PCJPM-PDJPM-PKJPM-PLJPM-PMJPM-PJAMJBVYLD

Summary

JPMorgan Chase & Co. reported solid financial results for the second quarter of 2016, with net income of $6.2 billion, or $1.55 per diluted share, and total net revenue of $24.4 billion. This represents a slight decrease in net income year-over-year, but total net revenue saw a 2% increase, primarily driven by higher net interest income. The firm successfully managed its expenses, with noninterest expense decreasing by 6% due to a net legal benefit and ongoing efficiency initiatives. The provision for credit losses increased, reflecting higher additions to the allowance for credit losses, particularly in wholesale portfolios impacted by the Oil & Gas sector. The Consumer & Community Banking (CCB) segment demonstrated strong growth, with net income up 5% driven by higher revenue and lower expenses, supported by increased loan and deposit balances, and growth in digital customer engagement. The Corporate & Investment Bank (CIB) saw a 5% increase in net revenue, driven by strong performance in Fixed Income Markets, though Investment Banking fees declined due to lower equity underwriting activity and industry-wide fee pressures. Capital management remains a strong point, with robust CET1 ratios well above regulatory minimums. Overall, the results reflect resilient performance across key business segments, supported by effective expense management and strong capital positioning.

Financial Highlights

28 data points
Beta

Net Income

$6.20B

EPS (Diluted)

$1.55

Total Assets

$2.47T

Free Cash Flow

-$1.52B

Financial Statements
Beta
Interest Expense$2.47B
Net Income$6.20B
EPS (Basic)$1.56
EPS (Diluted)$1.55
Shares Outstanding (Basic)3.68B
Shares Outstanding (Diluted)3.71B

Key Highlights

  • 1Net income of $6.2 billion, or $1.55 per diluted share, for the quarter.
  • 2Total net revenue increased 2% year-over-year to $24.4 billion, driven by higher net interest income.
  • 3Noninterest expense decreased 6% to $13.6 billion, aided by a net legal benefit and cost-saving initiatives.
  • 4Provision for credit losses increased by 50% to $1.4 billion, mainly due to additions to the allowance for credit losses, particularly in the wholesale segment.
  • 5Consumer & Community Banking (CCB) net income rose 5% to $2.7 billion, with strong growth in loans and deposits.
  • 6Corporate & Investment Bank (CIB) saw net revenue increase 5% to $9.2 billion, primarily due to a 35% increase in Fixed Income Markets revenue.
  • 7Common Equity Tier 1 (CET1) capital ratio remained strong at 12.0% under transitional Basel III rules.

Frequently Asked Questions

JPMorgan Chase reported net income of $6.2 billion for the second quarter of 2016, a slight decrease from $6.3 billion in the second quarter of 2015. However, total net revenue increased by 2% to $24.4 billion, up from $23.8 billion in the prior-year period, primarily driven by higher net interest income.

The provision for credit losses increased by 50% to $1.4 billion. This was primarily due to additions to the allowance for credit losses in the current quarter compared to reductions in the prior year. Specifically, higher net charge-offs in wholesale portfolios, particularly in the Oil & Gas and Metals & Mining sectors, contributed to the increase.

The CCB segment performed well, with net income increasing by 5% to $2.7 billion. This was driven by a 4% increase in net revenue, primarily from higher net interest income due to loan and deposit growth, and a 3% decrease in noninterest expense, aided by lower legal expenses and branch efficiencies. Digital customer engagement also showed strong growth, with active mobile customers up 18% year-over-year.

The CIB segment reported a 5% increase in total net revenue to $9.2 billion. This was largely due to a significant 35% increase in Fixed Income Markets revenue, driven by strong performance in Rates and Currencies & Emerging Markets. However, Investment Banking fees decreased by 10%, primarily due to lower equity underwriting fees. Noninterest expense in CIB decreased slightly by 1%.