JPMorgan Chase On Friday it posted profit and revenue that beat Wall Street estimates as credit costs and trading income were better than expected.
Here’s what the company said compared to estimates from analysts surveyed by LSEG, formerly Refinitiv:
- Earnings: $4.44 per share, versus $4.11 expected
- Revenue: $42.55 billion, versus $41.85 billion expected
The bank said first-quarter profit rose 6 percent to $13.42 billion, or $4.44 a share, from a year earlier, boosted by its acquisition of First Republic during the regional banking crisis last year. Earnings per share would have been 19 cents higher, excluding a $725 million boost to an FDIC commission that covered costs from last year’s bank failures.
Revenue rose 8% to $42.55 billion as the bank generated more interest income thanks to higher interest rates and larger loan balances.
But to Directive for 2024, the bank said it expects net interest income of about $90 billion, essentially unchanged from its previous forecast.
That appeared to disappoint investors, some of whom had expected JPMorgan to raise its guidance by $2 billion to $3 billion for the year. JPMorgan shares fell more than 6% on Friday.
While the NII’s guidance “strikes us as extremely conservative (and now leaves room for an upward revision later), we suspect the unchanged outlook will disappoint investors,” Piper Sandler analyst Scott Siefers said in a note on Friday.
JPMorgan posted a $1.88 billion forecast for credit losses in the quarter, well below the $2.7 billion analysts expected. The forecast was 17% lower than a year ago as the company released some loan loss reserves, rather than building them up as it did a year earlier.
While total trading revenue was down 5% from a year earlier, fixed income and equity results beat analysts’ expectations by more than $100 million each, coming in at $5.3 billion and 2.7 billion dollars, respectively.
JPMorgan Chief Executive Jamie Dimon called his company’s results “strong” in consumer and institutional sectors, helped by another buoyant US economy, although he sounded a note of caution about the future.
“Many economic indicators continue to be favorable,” Dimon said. “However, looking ahead, we remain alert to a number of important uncertain forces,” including overseas conflicts and inflationary pressures.
Although the largest U.S. bank by assets has fared well in the interest rate environment since the Federal Reserve began raising rates two years ago, smaller peers have seen their earnings squeezed.
The industry has been forced to pay for deposits as customers shift cash to higher-yielding assets, squeezing margins. Concern is also intensifying over rising losses on commercial loans, especially in office buildings and apartment buildings, as well as higher defaults on credit cards.
When asked about commercial real estate during a media call Friday, CFO Jeremy Barnum said that while JPMorgan built its inventory last year for the asset class, it saw no signs of improvement.
“Especially in the office, the story is known and as far as we can see, it’s not getting any better,” Barnum said. “There is no light at the end of the tunnel as far as we can see.”
Large banks are expected to outperform smaller banks, which tend to have larger exposures to commercial real estate, this quarter.
Wells Fargo and Citigroup also announced quarterly results on Friday, while Goldman Sachs, the bank of america and Morgan Stanley report next week.
