""Our capital cup runneth over, and that's why we increased the dividend. If I could give people consistent dividend guidance, et cetera." - Jamie Dimon" - Jamie Dimon
JPMorgan Chase & Co's (NYSE: JPM) Q1 2024 results indicate solid performance with a reported net income of $13.4 billion, an increase of 6.31% year-over-year, translating to an EPS of $4.44, reflecting a notable increase of 8.27% YOY. Revenue reached $42.5 billion, bolstered by robust investment banking activity and strong inflows into asset management. Management emphasized the firm's strategic positioning and forecasted the normalization of net interest income (NII) amid persistent economic uncertainties. CEO Jamie Dimon noted the significance of managing risks effectively while capitalizing on growth opportunities, particularly in light of geopolitical factors. Overall, the results underscore JPM's resilience in a dynamic market environment, as it navigates regulatory challenges and market shifts in consumer behavior.
Key Performance Indicators
Revenue
41.91B
QoQ: 8.57% | YoY:9.28%
Gross Profit
41.91B
1.00% margin
QoQ: 8.57% | YoY:9.28%
Operating Income
19.61B
QoQ: 21.56% | YoY:11.37%
Net Income
13.42B
QoQ: 44.18% | YoY:6.31%
EPS
4.45
QoQ: 46.38% | YoY:8.27%
Revenue Trend
Margin Analysis
Key Insights
Total revenue for Q1 2024: $42.5 billion, up from $40.9 billion in Q1 2023 (4% YOY).
Investment Banking fees grew by 18% YOY, reflecting strength in underwriting.
Net income: $13.4 billion, yielding an ROTCE of 21%.
Operating income ratio: 46.8%, indicating efficiency in cost management despite rising expenses.
CET1 ratio stands at 15%, stable compared to the previous quarter, signaling a strong capital position.
Financial Highlights
Revenue Performance:
- Total revenue for Q1 2024: $42.5 billion, up from $40.9 billion in Q1 2023 (4% YOY).
- Investment Banking fees grew by 18% YOY, reflecting strength in underwriting.
Profitability Metrics:
- Net income: $13.4 billion, yielding an ROTCE of 21%.
- Operating income ratio: 46.8%, indicating efficiency in cost management despite rising expenses.
Balance Sheet Health:
- CET1 ratio stands at 15%, stable compared to the previous quarter, signaling a strong capital position.
- Total assets of $4.09 trillion demonstrate steady growth in asset management and consumer banking sectors.
Cash Flow:
- Net cash provided by operating activities registered at -$154 billion, impacted by significant changes in working capital, though cash at the end of the period remains robust at $562 billion.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
41.91B
9.28%
8.57%
Gross Profit
41.91B
9.28%
8.57%
Operating Income
19.61B
11.37%
21.56%
Net Income
13.42B
6.31%
44.18%
EPS
4.45
8.27%
46.38%
Key Financial Ratios
currentRatio
1.57
grossProfitMargin
100%
operatingProfitMargin
46.8%
netProfitMargin
32%
returnOnAssets
0.33%
returnOnEquity
3.99%
debtEquityRatio
2.28
operatingCashFlowPerShare
$-53.01
freeCashFlowPerShare
$-53.01
dividendPayoutRatio
26%
priceToBookRatio
1.72
priceEarningsRatio
10.78
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key Insights from Management:
- Economic Resilience: "Consumers remain financially healthy, supported by a resilient labor market... Overall spend is in line with the prior year” - Jeremy Barnum.
- Market Activity: "Firm-wide IB fees were up 18% year-on-year, reflecting particular strength in underwriting fees" - Jeremy Barnum.
- Regulatory Caution: "We need to be mindful that some meaningful portion of that [capital markets activity] is likely pulling forward from later in the year" - Jeremy Barnum. This showcases management's awareness of market conditions and regulatory pressures, particularly regarding future earnings potential in investment banking.
"Our capital cup runneth over, and that's why we increased the dividend. If I could give people consistent dividend guidance, et cetera." - Jamie Dimon
— Jamie Dimon
"We continue to expect the 2024 Card net charge-off rate to be below 3.5%." - Jeremy Barnum
— Jeremy Barnum
Forward Guidance
Management has projected total NII ex Markets to approximate $89 billion, reflecting adjustments according to the forward interest rate curve entailing three expected rate cuts. Additionally, adjusted expenses have been guided at about $91 billion, evidencing planned enhancements in operational efficiency amidst ongoing regulatory evaluations. Monitoring resets in interest rate policies and continued client engagement will be crucial for future financial performances, specifically in the mortgage and credit card sectors.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
JPM Focus
1.00%
46.80%
3.99%
10.78%
C
1.00%
36.60%
1.63%
8.98%
WFC
1.00%
31.30%
2.55%
11.10%
TD
1.00%
38.70%
2.51%
12.85%
NU
43.20%
21.10%
5.57%
37.23%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
JPMorgan Chase has demonstrated resilience amid a complex macroeconomic landscape, leveraging its capital strengths and operational efficiencies to mitigate risks. The strategic acquisition of First Republic positions it well for future growth. Nevertheless, investors should remain cognizant of potential regulatory shifts and market volatility that may affect profitability going forward. Long-term investors may find the current valuation attractive given its strong earnings trajectory, effective management strategy, and the potential for further growth in areas such as investment banking and asset management.
Key Investment Factors
Growth Potential
JPM has shown robust growth through strategic acquisitions, notably the First Republic acquisition, contributing $1.7 billion in revenue this quarter, alongside strong trends in investment banking and asset management.
Profitability Risk
The primary risks stem from potential economic slowdowns influenced by monetary policy shifts and regulatory complexities that could compress NII and lead to increased charge-offs in the credit segment.
Financial Position
The financial position remains strong, underscored by a sustained CET1 ratio of 15% and a comprehensive asset management portfolio, positioning JPM to weather economic uncertainties while seizing growth opportunities.
SWOT Analysis
Strengths
Strong brand recognition and market share in diversified banking services.
Robust capital position with a CET1 ratio of 15%.
Leadership in investment banking, evidenced by substantial fee increases.
Weaknesses
Exposure to regulatory changes affecting capital requirements and operational costs.
High reliance on credit card and mortgage segments which are sensitive to market conditions.
Opportunities
Expansion of the investment banking pipeline through M&A activity despite market headwinds.
Increased investment in technology to enhance digital banking and payments services.
Threats
Geopolitical risks potentially impacting banking relationships and client stability.
Rising interest rates could compress margins and influence lending activities negatively.