10-QPeriod: Q3 FY2018

JPMORGAN CHASE & CO Quarterly Report for Q3 Ended Sep 30, 2018

Filed October 31, 2018For Securities:JPMJPM-PCJPM-PDJPM-PKJPM-PLJPM-PMJPM-PJAMJBVYLD

Summary

JPMorgan Chase & Co. reported a strong third quarter of 2018, with record net income of $8.4 billion and diluted EPS of $2.34 per share, driven by a 7% increase in total net revenue to $27.3 billion and a 35% decrease in the provision for credit losses. The effective tax rate also decreased due to the Tax Cuts and Jobs Act (TCJA), contributing to a 24% year-over-year increase in net income. The firm demonstrated robust profitability with a Return on Common Equity (ROE) of 14% and Return on Tangible Common Equity (ROTCE) of 17%. The company highlighted growth across its business segments, with Consumer & Community Banking (CCB) showing a significant 60% increase in net income, driven by higher deposit margins and loan growth. The Corporate & Investment Bank (CIB) saw a 2% increase in net revenue, with strong performance in Equity Markets and Treasury Services. Commercial Banking (CB) and Asset & Wealth Management (AWM) also reported increased net income and revenue. Capital ratios remained strong, with a Common Equity Tier 1 (CET1) capital ratio of 12.0% under the Basel III Fully Phased-In Standardized approach, exceeding regulatory minimums. The firm continued to grow its tangible book value per share, ending the quarter at $55.68. Overall, the report indicates a healthy financial performance with solid capital levels and growth across key business lines.

Financial Highlights

32 data points
Beta

Net Income

$8.38B

EPS (Diluted)

$2.34

Total Assets

$2.62T

Cash & Equivalents

$419.10B

Free Cash Flow

$13.19B

Financial Statements
Beta
Interest Expense$5.53B
Net Income$8.38B
EPS (Basic)$2.35
EPS (Diluted)$2.34
Shares Outstanding (Basic)3.38B
Shares Outstanding (Diluted)3.39B

Key Highlights

  • 1Net income reached a record $8.4 billion for the third quarter, a 24% increase year-over-year, with diluted EPS at $2.34.
  • 2Total net revenue grew by 7% to $27.3 billion, driven by a 9% increase in Net Interest Income and a 4% increase in Noninterest Revenue.
  • 3Provision for credit losses decreased by 35% to $948 million, primarily due to improvements in the consumer portfolio.
  • 4Return on Common Equity (ROE) was 14%, and Return on Tangible Common Equity (ROTCE) was 17%, reflecting strong profitability.
  • 5Consumer & Community Banking (CCB) net income increased by 60% to $4.1 billion, supported by higher deposit margins and loan growth.
  • 6Corporate & Investment Bank (CIB) net revenue increased by 2% to $8.8 billion, with Equity Markets revenue up 17%.
  • 7Common Equity Tier 1 (CET1) capital ratio remained strong at 12.0% (Standardized approach), well above regulatory requirements.

Frequently Asked Questions

The primary drivers for the increase in net income were higher total net revenue, which grew by 7% to $27.3 billion, and the favorable impact of the lower U.S. federal statutory income tax rate resulting from the Tax Cuts and Jobs Act (TCJA). These were partially offset by an increase in noninterest expense.

The provision for credit losses decreased significantly by 35% to $948 million compared to the third quarter of 2017. This decrease was mainly driven by the consumer portfolio, particularly a net reduction in the allowance for credit losses compared to a net addition in the prior year.

JPMorgan Chase maintained strong capital ratios. The Common Equity Tier 1 (CET1) capital ratio was 12.0% under the Basel III Standardized approach (Fully Phased-In), and the Tier 1 Capital ratio was 13.6%. These ratios are well above the regulatory minimums.

The Consumer & Community Banking (CCB) segment showed the most significant growth in net income, increasing by 60% year-over-year to $4.1 billion. The Corporate & Investment Bank (CIB) also reported a 15% increase in net income year-to-date, and Commercial Banking (CB) and Asset & Wealth Management (AWM) saw increases of 24% and 34%, respectively, in net income year-to-date.