On Friday, JPMorgan Chase announced record first-quarter revenue that above analysts’ forecasts. This was made possible by rising rates, which caused a nearly 50% increase in net interest income.
The bank said that its earnings for the first three months of the year increased by 52% to $12.62 billion, or $4.10 per share. This sum includes $868 million in losses on securities; if these losses are subtracted, earnings per share increase by 22 cents, yielding an adjusted profit per share of $4.32.
JPMorgan Chase reports record earning
Due to the Federal Reserve’s most aggressive rate-hiking campaign in decades, net interest income increased by 49% to $20.8 billion, driving a 25% increase in overall company revenue to $39.34 billion.
In premarket trading, the bank’s shares increased by 6.1%.
CEO Jamie Dimon stated in the announcement that “the U.S. economy continues to be on generally healthy footings — consumers are still spending and have strong balance sheets, and businesses are in good shape.”
Also Read : JPMorgan’s first-quarter earnings and sales both increased.
“However, the storm clouds that we have been monitoring for the past year remain on the horizon, and the turmoil in the banking industry adds to these risks,” he said, adding that the sector might limit down lending as banks grow more cautious ahead of a potential downturn.
Following the failure of two regional lenders this month, JPMorgan, the largest bank by assets in the United States, is being widely studied for indications of how the sector fared. Analysts had predicted that JPMorgan would gain from an increase in deposits following the deadly bank runs at Silicon Valley Bank and Signature Bank.
Customers have been withdrawing monies from the regulatory banking system at the same time as they become aware of the greater rates available in areas like money market funds.
This appeared to occur at JPMorgan, where total deposits decreased by 7% from a year earlier to $2.38 trillion, exceeding the $2.31 trillion expectation of analysts surveyed by StreetAccount.
Retail customers have reacted far more slowly than commercial clients, who have been withdrawing deposits as rates have risen over the past year. For instance, JPMorgan’s retail deposits increased by 3% in the fourth quarter.
As seen by the 4% first-quarter decline in deposits at the bank’s massive retail banking business, it appears that Main Street consumers have been looking for greater rates.
On the assumption that the economy will slow down later this year, banks have already started putting aside additional loan loss provisions. As it increased reserves by a net $1.1 billion and recorded $1.1 billion in net loan chargeoffs, JPMorgan reported credit costs of $2.3 billion, which was about in line with the StreetAccount forecast.
The forecast U.S. recession might limit economic growth this year by making it more difficult for households and companies to borrow money, therefore it will be important to determine if JPMorgan and other financial institutions are tightening lending rules in advance of the anticipated downturn.
Wall Street might not be much of a help this quarter, since investment banking fees are probably going to be low owing to the still-closed IPO market. Jeremy Barnum, the CFO, stated in February that trading was going “a little bit worse” and that investment banking income was expected to drop by 20% from a year earlier.
Analysts will, at the end, be interested in hearing what Dimon has to say about the economy and his predictions for the course of the local banking crisis. JPMorgan led attempts to pump First Republic with $30 billion in deposits, which helped stabilise the client bank after it teetered last month.
Before last Friday, JPMorgan’s stock had fallen approximately 4%, outpacing the 31% decrease of the KBW Bank Index.
While Bank of America and Goldman Sachs report on Tuesday, and Morgan Stanley releases earnings on Wednesday, Wells Fargo and Citigroup also issued results on Friday.