The bank also boosted its dividend by 12%.
JPMorgan Chase (NYSE:JPM) got the first quarter earnings season off to a solid start as the nation’s largest bank turned in a strong quarter. But CEO Jamie warned of “considerable turbulence” ahead.
The firm beat earnings and revenue estimates for the quarter, and it also raised its dividend by 12%.
Overall, net revenue was up 8% year-over-year to $45.3 billion, which exceeded median estimates of $43.5 billion. Net interest income rose 1% to $23.4%, as loans balances increased 2% and deposits climbed 2%.
Net income rose 9% year-over-year to $14.6 billion, while earnings surged 14% to $5.07 per share. This was far better than the $4.64 per share estimate among analysts.
Investment banking fees rise
JPMorgan Chase posted revenue gains across its major business. Revenue in consumer and community banking rose 4% to $18.3 billion. However, net income in this segment was 8% lower at $4.4 billion.
This was due to higher provisions for credit losses, precipitated by higher net charge-offs and overall weaker credit quality stemming from the more challenging economic environment. Also, expenses rose 6% in the quarter, mainly related to higher marketing and technology expenses, and higher compensation for advisors.
Meanwhile the commercial and investment banking segment saw revenue climb 12% to $19.7 billion. Investment banking fees were $2.2 billion, up 12%, driven by higher debt underwriting and advisory fees, partially offset by lower equity underwriting fees. Markets and securities services revenue jumped 19% to $10.9 billion. Net income climbed 5% to $6.9 billion.
Asset and wealth management also had a strong quarter, with revenue up 12% to $5.7 billion. Assets under management were $4.1 trillion, and client assets were $6.0 trillion, both of which were up 15% year-over-year. This was driven by continued net inflows and higher market levels. Net income in this business jumped 23% year-over-year, fueled in part by a provision reserve.
Tariff and geopolitical concerns
JPMorgan’s fortress balance sheet remained strong, helped by its excellent overhead or efficiency ratio of 52% — which is the lowest among the major banks. This and its high common equity tier 1 capital (CET1) ratio allowed the company to repurchase $7 billion in common stock and boost its dividend by 12% to $1.40 per share. It marks the 15th consecutive year of dividend raises for the bank.
As he did in his letter to shareholders released earlier this week, Dimon issued a warning about the vulnerable state of the economy.
“The economy is facing considerable turbulence (including geopolitics), with the potential positives of tax reform and deregulation and the potential negatives of tariffs and “trade wars,” ongoing sticky inflation, high fiscal deficits and still rather high asset prices and volatility. As always, we hope for the best but prepare the firm for a wide range of scenarios.” Dimon said. “And our fortress balance sheet enables the Firm to be a pillar of strength, particularly during volatile or challenging times.”
JPMorgan Chase is well-built to withstand turbulent times, with its fortress balance sheet. The stock is down just 5% YTD and has held up well in this recent bout of volatility. It has a low P/E ratio of 11 and a median price target of $267 per share, which would be up 17% from the current price.
At this valuation, it looks like a solid option for turbulent times.
