10-QPeriod: Q3 FY2020

JPMORGAN CHASE & CO Quarterly Report for Q3 Ended Sep 30, 2020

Filed November 2, 2020For Securities:JPMJPM-PCJPM-PDJPM-PKJPM-PLJPM-PMJPM-PJAMJBVYLD

Summary

JPMorgan Chase & Co. reported solid results for the third quarter of 2020, demonstrating resilience amidst the ongoing COVID-19 pandemic. Net income of $9.4 billion, or $2.92 per share, represented a 4% increase year-over-year, driven by strong performance in the Corporate & Investment Bank (CIB) segment, particularly in Markets and Investment Banking fees, which were up 30% and 9% respectively. Total net revenue remained flat year-over-year at $29.1 billion, with a notable 7% increase in noninterest revenue offsetting a 9% decline in net interest income due to lower interest rates. The Firm maintained robust capital ratios, with a Common Equity Tier 1 (CET1) ratio of 13.1%, well above regulatory requirements. The provision for credit losses significantly decreased by 60% year-over-year to $611 million, reflecting improved credit conditions and the impact of payment assistance and government stimulus programs, although the total allowance for credit losses remained elevated at $33.8 billion due to the adoption of CECL and macroeconomic uncertainties. Deposits saw substantial growth of 30% year-over-year, highlighting strong liquidity. The Firm continued its commitment to supporting clients and communities, announcing a $30 billion commitment to advance racial equity and aligning its financing strategy with the goals of the Paris Agreement.

Financial Highlights

32 data points
Beta

Net Income

$9.44B

EPS (Diluted)

$2.92

Total Assets

$3.25T

Cash & Equivalents

$487.52B

Free Cash Flow

-$14.69B

Financial Statements
Beta
Interest Expense$1.69B
Net Income$9.44B
EPS (Basic)$2.93
EPS (Diluted)$2.92
Shares Outstanding (Basic)3.08B
Shares Outstanding (Diluted)3.08B

Key Highlights

  • 1Net income increased by 4% year-over-year to $9.4 billion, or $2.92 per diluted share.
  • 2Total net revenue was flat at $29.1 billion, with noninterest revenue up 7% driven by CIB, while net interest income decreased by 9% due to lower rates.
  • 3Provision for credit losses significantly decreased by 60% to $611 million, reflecting lower net charge-offs and improved credit conditions, though the total allowance for credit losses was $33.8 billion.
  • 4Deposits increased by 30% year-over-year to $2.0 trillion, reflecting significant inflows.
  • 5The Common Equity Tier 1 (CET1) capital ratio remained strong at 13.1%.
  • 6The Corporate & Investment Bank (CIB) segment saw a 21% increase in total net revenue, driven by strong performance in Markets (up 30%) and Investment Banking fees (up 9%).
  • 7Consumer & Community Banking (CCB) net income decreased by 9% to $3.9 billion, reflecting lower net interest income and card income due to the pandemic's impact on sales volumes and deposit margins.

Frequently Asked Questions

The COVID-19 pandemic had a mixed impact. While it led to a decrease in net interest income due to lower interest rates and impacted card income due to lower sales volumes, it also contributed to a significant 30% increase in deposits as customers sought to hold more liquidity. The provision for credit losses, while still substantial at $33.8 billion in total allowance, decreased significantly quarter-over-quarter and year-over-year, partly due to government stimulus and payment assistance programs. The firm's investment banking and markets segments performed strongly, offsetting some of the pandemic's negative effects.

The 4% year-over-year increase in net income was primarily driven by the strong performance of the Corporate & Investment Bank (CIB) segment, which saw a 21% increase in total net revenue. This was fueled by a 30% increase in Markets revenue and a 9% increase in Investment Banking fees, demonstrating resilience and growth in capital markets activities despite the challenging economic environment.

JPMorgan Chase maintained a strong capital position. The Common Equity Tier 1 (CET1) capital ratio stood at 13.1%, well above regulatory minimums. The firm also elected to apply CECL capital transition provisions, which provided a temporary relief to its capital metrics in response to the pandemic. Despite macroeconomic uncertainties, the firm's capital ratios remained robust, indicating strong financial health.

The firm anticipates net interest income to be approximately $55 billion for the full year 2020 and $54 billion for 2021, market dependent. This reflects the continued impact of lower interest rates on net interest income, though partially offset by balance sheet growth and higher net interest income in CIB Markets.