JP MORGAN CHASE(US:JPM)2024-07-12 15:47Financial Data and Key Metrics Changes - The firm reported net income of $18.1 billion, EPS of $6.12, and revenue of $51 billion, with an ROTCE of 28%. Excluding significant items, net income was $13.1 billion, EPS was $4.40, and ROTCE was 20% [3][5] - Revenue increased by $8.6 billion, or 20% year-on-year. Excluding the Visa gain and prior year’s First Republic bargain purchase gain, revenue was up $3.4 billion, or 9% [5][15] - Expenses were $23.7 billion, up $2.9 billion, or 14% year-on-year. Excluding the foundation contribution, expenses were up 9% primarily due to compensation and employee growth [5][6] Business Line Data and Key Metrics Changes - In the Consumer and Community Banking (CCB) segment, net income was $4.2 billion on revenue of $17.7 billion, up 3% year-on-year. Average deposits were down 7% year-on-year [8][9] - The Commercial and Investment Bank (CIB) reported net income of $5.9 billion on revenue of $17.9 billion, with investment banking fees up 50% year-on-year [10][11] - Asset and Wealth Management (AWM) reported net income of $1.3 billion with revenue of $5.3 billion, up 6% year-on-year, driven by higher management fees and strong net inflows [14] Market Data and Key Metrics Changes - Payments revenue was $4.5 billion, down 4% year-on-year, while total market revenue was $7.8 billion, up 10% year-on-year [12][13] - Average loans in banking and payments were up 2% year-on-year, while average client deposits were also up 2% year-on-year [13] Company Strategy and Development Direction - The firm intends to increase the quarterly common stock dividend from $1.15 to $1.25 per share in Q3 2024, reflecting strong performance [7][8] - The company remains focused on executing with discipline and maintaining a reasonable CET1 ratio while managing capital returns [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the investment banking pipeline despite ongoing headwinds, noting that refinancing activity has contributed to strong performance [11][35] - The firm anticipates continued normalization of net interest income (NII) due to higher deposit costs and economic conditions, with expectations for flat to slightly down deposit balances [24][25] Other Important Information - The firm completed the Comprehensive Capital Analysis and Review (CCAR) with a preliminary Stress Capital Buffer (SCB) of 3.3%, which may increase [7][29] - Credit costs were $3.1 billion, reflecting net charge-offs of $2.2 billion, primarily driven by card services [6][10] Q&A Session Summary Question: Update on capital and ROTCE - Management indicated that potential revisions to capital regulations are unlikely to support a higher normalized ROTCE than the current 17% target [17][18] Question: NII normalization potential - Management acknowledged some moderation in deposit pressures but emphasized that it is too early to declare an end to the over-earning narrative [23][24] Question: Stress capital buffer dialogue with the Fed - Management refrained from commenting on specific discussions with the Fed but noted that the SCB is subject to review and may change [28][29] Question: Buyback strategy and volume - Management clarified that buyback volumes are determined by current conditions and capital generation, with a focus on maintaining a sustainable dividend [66][70] Question: Investment banking environment - Management reported elevated dialogue in investment banking but cautioned about the risks of refinancing dominating the market [34][35] Question: Consumer credit trends - Management noted that charge-offs and delinquencies are normalizing, with subtle signs of weakness in lower-income segments [39][40]