How did JPMorgan's first-quarter 2024 earnings compare with a year earlier?

Reported net income was $13.4 billion, or $4.44 per diluted share, versus $12.6 billion, or $4.10 per share, in Q1 2023, an increase of 6% in net income and 8% in EPS. Excluding the $725 million FDIC special assessment increase, net income would have been $14.0 billion, or $4.63 per share. Revenue growth of 9% outpaced expense growth in the underlying business, although total noninterest expense rose 13%.

What was the FDIC special assessment charge and why does it matter?

The Firm recorded a $725 million increase to the estimated FDIC special assessment, reflecting the FDIC's revised estimate of losses to the Deposit Insurance Fund. It reduced EPS by $0.19 and sits in the Corporate segment. It is a one-time adjustment to a prior $2.9 billion estimate recorded in Q4 2023, so investors may want to view the $4.63 adjusted EPS as a cleaner read on underlying performance.

Is there a risk that credit quality is deteriorating?

Credit costs are rising from very low levels rather than signaling broad deterioration. Net charge-offs were $2.0 billion, up from $1.1 billion a year earlier, mostly in Card Services, where the net charge-off rate reached 3.32%. Management attributes this largely to normalization. Overall, the Firm recorded a net reserve release of $72 million, and Home Lending benefited from improved home price outlooks. Investors should monitor the trend in Card Services delinquencies and charge-offs.

What does the 10% dividend increase and buyback activity signal about capital allocation?

The Firm declared a quarterly dividend of $1.15 per share, up from $1.05, and repurchased $2.0 billion of common stock net of employee issuances. With a 15.0% standardized CET1 ratio and a 42% net payout ratio over the last twelve months, management is returning capital while retaining a substantial buffer. This suggests management believes its capital is sufficient to fund growth and still return cash to shareholders.

Why did net interest income decline sequentially, and what is the outlook?

Reported NII fell 4% from Q4 2023 to $23.1 billion, and NII excluding Markets fell 2%, reflecting deposit margin compression and lower deposit balances, primarily in Consumer & Community Banking. Management expects normalization to continue for NII, which implies pressure on this key revenue driver may persist, although the Firm's balance sheet mix and higher rates have supported year-over-year growth.

JPMORGAN CHASE & CO 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed April 12, 2024. Cited figures are marked; the original filing is the authoritative source.

JPMorgan Chase reported first-quarter 2024 net income of $13.4 billion^a, or $4.44 per diluted share, compared with $12.6 billion, or $4.10 per share, in the prior-year quarter.

Results include a $725 million^b increase to the estimated FDIC special assessment, which reduced EPS by $0.19. Excluding that charge, net income would have been $14.0 billion, or $4.63 per share. Reported net revenue rose 9% to $41.9 billion, driven by higher net interest income, Investment Banking fees, and asset management fees, while ROTCE was 21% and ROE 17%.

Firmwide managed net revenue of $42.5 billion^c was up 8% year over year, and noninterest expense of $22.8 billion was up 13%, largely reflecting higher compensation and the FDIC charge. Credit costs and capital strength were the other central themes. The provision for credit losses fell to $1.9 billion from $2.3 billion, but net charge-offs rose to $2.0 billion, up $819 million, driven mainly by normalization in Card Services, where the net charge-off rate reached 3.32%.

The Firm's CET1 ratio was an estimated 15.0% on the standardized basis, and book value per share rose 13% to $106.81^d. The Board also declared a quarterly dividend of $1.15 per share, up 10%, and the Firm repurchased $2.0 billion of common stock net of employee issuances. Management signaled that net interest income is normalizing: NII fell 4% sequentially, and NII excluding Markets fell 2%, due to deposit margin compression and lower deposit balances, mainly in Consumer & Community Banking.

Management expects continued normalization in both NII and credit costs. The results also include the integration of First Republic, acquired May 1, 2023, which contributed $668 million of net income, and CEO Jamie Dimon flagged geopolitical risks, persistent inflation, and quantitative tightening as key uncertainties.

02—Key points

Key Highlights

Reported net income of $13.4 billion ($4.44 per diluted share), up 6% year over year; excluding the $725 million FDIC special assessment increase, net income was $14.0 billion ($4.63 per share).
Reported net revenue of $41.9 billion rose 9% year over year, with NII up 11% to $23.2 billion and Investment Banking fees up 21%.
Noninterest expense rose 13% to $22.8 billion; reported overhead ratio was 54% versus 52% a year earlier.
Net charge-offs rose to $2.0 billion (up $819 million), led by Card Services, whose net charge-off rate climbed to 3.32% from 2.07%; the provision was $1.9 billion, including a $72 million net reserve release.
Capital position remained strong, with a 15.0% standardized CET1 ratio, a 6.1% supplementary leverage ratio, and $258 billion of CET1 capital; the Board declared a $1.15 quarterly dividend, up 10%.
Book value per share rose 13% to $106.81 and tangible book value per share rose 15% to $88.43; ROTCE was 21%.
Management guided to continued normalization of both NII and credit costs, with NII ex-Markets down 2% sequentially on deposit margin compression and lower deposit balances.

03—Questions

Frequently Asked Questions

How did JPMorgan's first-quarter 2024 earnings compare with a year earlier?
Reported net income was $13.4 billion, or $4.44 per diluted share, versus $12.6 billion, or $4.10 per share, in Q1 2023, an increase of 6% in net income and 8% in EPS. Excluding the $725 million FDIC special assessment increase, net income would have been $14.0 billion, or $4.63 per share. Revenue growth of 9% outpaced expense growth in the underlying business, although total noninterest expense rose 13%.
What was the FDIC special assessment charge and why does it matter?
The Firm recorded a $725 million increase to the estimated FDIC special assessment, reflecting the FDIC's revised estimate of losses to the Deposit Insurance Fund. It reduced EPS by $0.19 and sits in the Corporate segment. It is a one-time adjustment to a prior $2.9 billion estimate recorded in Q4 2023, so investors may want to view the $4.63 adjusted EPS as a cleaner read on underlying performance.
Is there a risk that credit quality is deteriorating?
Credit costs are rising from very low levels rather than signaling broad deterioration. Net charge-offs were $2.0 billion, up from $1.1 billion a year earlier, mostly in Card Services, where the net charge-off rate reached 3.32%. Management attributes this largely to normalization. Overall, the Firm recorded a net reserve release of $72 million, and Home Lending benefited from improved home price outlooks. Investors should monitor the trend in Card Services delinquencies and charge-offs.
What does the 10% dividend increase and buyback activity signal about capital allocation?
The Firm declared a quarterly dividend of $1.15 per share, up from $1.05, and repurchased $2.0 billion of common stock net of employee issuances. With a 15.0% standardized CET1 ratio and a 42% net payout ratio over the last twelve months, management is returning capital while retaining a substantial buffer. This suggests management believes its capital is sufficient to fund growth and still return cash to shareholders.
Why did net interest income decline sequentially, and what is the outlook?
Reported NII fell 4% from Q4 2023 to $23.1 billion, and NII excluding Markets fell 2%, reflecting deposit margin compression and lower deposit balances, primarily in Consumer & Community Banking. Management expects normalization to continue for NII, which implies pressure on this key revenue driver may persist, although the Firm's balance sheet mix and higher rates have supported year-over-year growth.

04—Continue

← View all 8-K filings