01—Abstract
Summary
Summary of the 8-K filed January 12, 2024. Cited figures are marked; the original filing is the authoritative source.
JPMorgan Chase furnished slides from its January 12, 2024 investor presentation reviewing 4Q23 and full-year 2023 results.
Reported 4Q23 net income was $9.3Ba (EPS $3.04, ROTCE 15%), held down by two significant items: a $2.9B pretax FDIC special assessment and $743mm of pretax net investment securities losses. Excluding these items, net income was $12.1B (EPS $3.97) and ROTCE was 19%. Managed revenue was $39.9B, up $2.5B year over year excluding First Republic, while expense was $24.5B and the managed overhead ratio was 61%.
Credit costs rose to $2.8Bb, driven by $2.2B of net charge-offs and a $0.6B reserve build, with Card Services normalization a key contributor. Capital and liquidity remained strong. The Standardized and Advanced CET1 ratios were both 15.0%, up from 13.2% a year earlier, with CET1 capital of $251B and standardized RWA of $1.7T.
The firm paid a $1.05c per share common dividend ($3.1B), made $2.0B of net share repurchases, and reported an LTM net payout of 41%. Tangible book value per share rose to $86.08, and the Firm LCR was 113%. Full-year 2023 net income was $49.6B (EPS $16.23, ROTCE 21%).
For 2024, management guided to net interest income of about $90Bd (about $88B excluding Markets), assuming six Fed rate cuts and loan growth partially offsetting lower rates. Adjusted expense is expected to be about $90B, driven by front-office hiring, technology spend, and marketing, and Card Services NCO rate is expected below 3.50%. Outlook for NII and expense is explicitly market-dependent.
02—Key points
Key Highlights
- 4Q23 reported net income of $9.3B and EPS of $3.04, including a $2.9B pretax FDIC special assessment and $743mm of pretax net investment securities losses
- Excluding significant items, 4Q23 net income was $12.1B, EPS was $3.97, and ROTCE was 19%
- Managed revenue of $39.9B, with 4Q23 NII of $24.2B and noninterest revenue of $15.8B; managed overhead ratio of 61%
- Credit costs rose to $2.8B from $1.4B in 3Q23, with net charge-offs of $2.2B and a $0.6B reserve build
- CET1 ratios of 15.0% (standardized and advanced) and CET1 capital of $251B; tangible book value per share of $86.08
- Capital returned: $1.05 quarterly dividend ($3.1B) plus $2.0B of net share repurchases; LTM net payout of 41%
- 2024 outlook: NII of about $90B (about $88B ex-Markets), adjusted expense of about $90B, and Card Services NCO rate below 3.50%
03—Questions
Frequently Asked Questions
What drove the drop in reported 4Q23 earnings?
Reported 4Q23 net income of $9.3B included a $2.9B pretax FDIC special assessment (about $2.2B after tax) and $743mm of pretax net investment securities losses. Excluding these significant items, net income was $12.1B and EPS was $3.97, so the underlying quarter was materially stronger than the headline figure suggests.
How did credit quality trend in the quarter?
Credit costs were $2.8B, up from $1.4B in 3Q23. Net charge-offs rose to $2.2B from $1.5B, and the reserve build was $0.6B. Management attributed the increase mainly to continued normalization in Card Services, where the NCO rate was 2.79% in 4Q23 versus 1.62% a year earlier.
Is the firm's capital position strong enough to support shareholder returns?
Yes, based on the filing. The Standardized and Advanced CET1 ratios were both 15.0%, up from 13.2% a year earlier, and Total Loss-Absorbing Capacity was $514B. The firm paid a $1.05 quarterly dividend, repurchased $2.0B of stock net of issuance, and reported a 41% LTM net payout.
What is the 2024 outlook for revenue and expenses?
Management expects 2024 NII of about $90B, or about $88B excluding Markets, with loan growth partly offsetting the effect of lower rates under an assumption of six rate cuts. It expects adjusted expense of about $90B, reflecting front-office hiring, technology investment, and higher market-dependent volume expense. Both outlooks are described as market-dependent.
How did the business segments perform in 4Q23?
Consumer & Community Banking earned $4.8B (ROE 33%), down 3% year over year. Corporate & Investment Bank earned $2.5B, down 24% year over year, with revenue of $11.0B. Commercial Banking earned $1.7B, up 4% after excluding First Republic effects, and Asset & Wealth Management earned $1.2B reported ($925mm ex-FR). Corporate posted a net loss of $875mm, which includes the FDIC special assessment and securities losses.
04—Continue