10-QPeriod: Q3 FY2023

JPMORGAN CHASE & CO Quarterly Report for Q3 Ended Sep 30, 2023

Filed November 1, 2023For Securities:JPMJPM-PCJPM-PDJPM-PKJPM-PLJPM-PMJPM-PJAMJBVYLD

Summary

JPMorgan Chase & Co. reported a strong third quarter of 2023, with net income of $13.2 billion, a 35% increase year-over-year, and diluted EPS of $4.33. Total net revenue surged by 22% to $39.9 billion, primarily driven by a 30% increase in net interest income to $22.7 billion, benefiting from higher rates and the inclusion of First Republic Bank. Noninterest revenue also saw a healthy 13% increase to $17.1 billion. The acquisition of First Republic Bank contributed positively to the results, adding to revenue and deposits, though it also increased noninterest expense by 13% to $21.8 billion, largely due to integration costs and higher compensation. The provision for credit losses increased year-over-year, reflecting a normalization in net charge-offs, particularly in the credit card segment, as the portfolio returns to pre-pandemic levels. Capital ratios remained robust, with the CET1 capital ratio at 14.3%. Overall, the bank demonstrated solid financial performance, driven by strong net interest income and successful integration of the First Republic acquisition, while carefully managing credit quality.

Financial Highlights

33 data points
Beta

Net Income

$13.15B

EPS (Diluted)

$4.33

Total Assets

$3.90T

Cash & Equivalents

$511.37B

Free Cash Flow

$45.12B

Financial Statements
Beta
Interest Expense$21.83B
Net Income$13.15B
EPS (Basic)$4.33
EPS (Diluted)$4.33
Shares Outstanding (Basic)2.93B
Shares Outstanding (Diluted)2.93B

Key Highlights

  • 1Net income increased 35% year-over-year to $13.2 billion.
  • 2Total net revenue increased 22% year-over-year to $39.9 billion.
  • 3Net interest income rose 30% year-over-year to $22.7 billion, driven by higher rates and First Republic acquisition.
  • 4Noninterest expense increased 13% year-over-year to $21.8 billion, impacted by First Republic integration and higher legal expenses.
  • 5Provision for credit losses increased significantly year-over-year, with net charge-offs rising, particularly in Card Services, as the portfolio normalizes.
  • 6Common equity Tier 1 (CET1) capital ratio stood strong at 14.3%.
  • 7Tangible book value per share grew 17% year-over-year to $82.04.

Frequently Asked Questions

The primary drivers for the 30% year-over-year increase in net interest income were higher market interest rates, the impact of the First Republic acquisition, and higher revolving balances in Card Services. These factors were partially offset by lower average deposit balances and lower net interest income in the Markets business.

The First Republic acquisition led to a 13% increase in total noninterest expense to $21.8 billion. This was predominantly driven by integration and related costs from the acquisition, higher compensation expense (including growth in headcount and wage inflation), and increased legal expenses, particularly within the Corporate & Investment Bank segment.

The provision for credit losses increased by 10% year-over-year to $1.4 billion for the quarter. This increase was primarily driven by higher net charge-offs, particularly in Card Services within the Consumer & Community Banking segment, as the portfolio normalizes to pre-pandemic levels. However, the allowance for loan losses to total retained loans ratio remained relatively stable at 1.73% compared to 1.70% in the prior year, indicating continued prudent management of credit risk.

Consumer & Community Banking (CCB) showed robust performance with a 29% increase in total net revenue, driven by higher net interest income and beneficial fee income, and a strong return on equity of 41%. The Corporate & Investment Bank (CIB) saw a 2% decrease in net revenue, with Markets revenue down 3%, impacted by lower net interest income in Markets. Commercial Banking (CB) reported a 32% increase in total net revenue, with strong growth in net interest income. Asset & Wealth Management (AWM) delivered a 10% increase in total net revenue, driven by higher assets under management and growth in Global Private Bank revenue.