01—Abstract
Summary
Summary of the 8-K filed October 11, 2024. Cited figures are marked; the original filing is the authoritative source.
JPMorgan Chase reported third-quarter 2024 net income of $12.9 billiona, or $4.37 per diluted share, down 2% from $13.2 billion ($4.33) a year earlier.
Reported net revenue was $42.7 billionb, but that figure includes a $7.9 billion net gain tied to Visa share exchanges in Corporate. Excluding that one-time item, the underlying picture is more mixed: managed net revenue rose 6% year over year to $43.3 billion, while noninterest expense rose 4% to $22.6 billion and the provision for credit losses more than doubled to $3.1 billion, driven by higher card charge-offs. Return on tangible common equity was 19% and return on common equity was 16%.
Business performance was uneven. Investment banking fees rose 31% and Equity Markets revenue rose 27%, while Fixed Income Markets was flat. Asset management fees grew 15% with record long-term net inflows of $72 billionc, and total client assets reached $5.7 trillion.
Consumer & Community Banking net income fell 31% to $4.0 billiond as deposits declined 8% and deposit margins compressed, partly offset by 11% growth in Card Services & Auto revenue. Card net charge-off rate reached 3.24%, reflecting seasoning of newer vintages and credit normalization. Capital remains very strong.
CET1 ratio was 15.3% on the standardized basis and 15.5% on the advanced basis, with a 6.0% supplementary leverage ratio. The firm returned $9.6 billion to shareholders through a $3.6 billion dividend ($1.25 per share, up from $1.15) and $6.0 billion of net buybacks. Management stated it is awaiting final Basel III endgame, G-SIB surcharge, and stress capital buffer rules, and that it is maintaining a modest buyback pace given inflated market valuations.
02—Key points
Key Highlights
- Net income of $12.9 billion ($4.37 per diluted share), down 2% YoY, but reported results include a $7.9 billion net gain on Visa shares that inflated revenue and earnings.
- Managed net revenue of $43.3 billion, up 6% YoY; Investment Banking fees up 31% and Equity Markets revenue up 27%.
- Provision for credit losses of $3.1 billion, up 125% YoY, with net charge-offs of $2.1 billion led by Card Services.
- Consumer & Community Banking net income down 31% to $4.0 billion on deposit margin compression and an 8% decline in average deposits.
- Asset & Wealth Management AUM of $3.9 trillion, up 23% YoY, with record long-term net inflows of $72 billion.
- Capital strength: CET1 ratio of 15.3% (standardized), SLR of 6.0%, and book value per share of $115.15, up 15%.
- Shareholder returns of $9.6 billion in the quarter, including a dividend increase to $1.25 per share and $6.0 billion of net buybacks.
03—Questions
Frequently Asked Questions
How much of the quarter's earnings came from the one-time Visa gain?
The firm recognized a $7.9 billion net gain related to its Visa share exchange, recorded in Corporate. This gain is embedded in reported net revenue and net income, so underlying earnings are materially lower than the headline $12.9 billion, though management did not present a precise ex-gain figure in the release.
Why did net income decline despite revenue growth?
Net income fell 2% YoY because the provision for credit losses rose $1.7 billion to $3.1 billion, noninterest expense increased 4% to $22.6 billion, and the effective tax rate rose to 24.0% from 22.9% over the nine-month period. Consumer & Community Banking profit fell sharply on deposit margin compression and lower deposit balances.
What is the credit outlook signaled by the results?
Card Services is the main pressure point. Its net charge-off rate rose to 3.24% from 2.49% a year earlier, and the 30+ day delinquency rate rose to 2.20%. The firm booked a $1.0 billion net reserve build, mostly in consumer, suggesting management is preparing for further normalization in card credit.
How are regulatory capital changes expected to affect JPMorgan?
Management is awaiting the final Basel III endgame rules, the G-SIB surcharge, and possible changes to the stress capital buffer or CCAR. With a 15.3% CET1 ratio and $544 billion of total loss-absorbing capacity, the firm states it is well capitalized under current rules, but the final requirements could affect future buyback and dividend capacity.
Is the firm still repurchasing shares, and at what pace?
Yes, but at a modest pace. The firm repurchased $6.0 billion of common stock net in the quarter, and management said it is keeping buybacks modest because market valuations are at least slightly inflated. It reserved the right to adjust the pace at any time, and a new $30 billion repurchase authorization took effect July 1, 2024.
04—Continue