JP MORGAN CHASE(JPM) - 2024 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The firm reported net income of $13.4 billion, EPS of$ 4.44 on revenue of $42.5 billion, and delivered an ROTCE of 21% [5] - Firmwide IB fees increased by 18% year-on-year, reflecting strength in underwriting fees [5] - Revenue excluding First Republic was$ 40.9 billion, up $1.5 billion or 4% year-on-year [6] - Expenses of$ 22 billion were up $1.8 billion or 9% year-on-year, driven by higher compensation and the FDIC special assessment [7] Business Line Data and Key Metrics Changes - CCB reported net income of$ 4.4 billion on revenue of $16.6 billion, which was up 1% year-on-year [8] - Banking and Wealth Management revenue was down 4% year-on-year, while client investment assets were up 25% year-on-year [9] - Home Lending revenue was up 10% year-on-year, driven by higher NII and production revenue [9] - Card Services revenue was up 8% year-on-year, with card outstandings up 13% [9] - CIB reported net income of$ 4.8 billion on revenue of $13.6 billion, with Investment Banking revenue up 27% year-on-year [11] - AWM reported net income of$ 1 billion with revenue of $4.7 billion, down 1% year-on-year [15] Market Data and Key Metrics Changes - Payments revenue was$ 2.4 billion, down 1% year-on-year [12] - Markets revenue totaled $8 billion, down 5% year-on-year, with fixed income down 7% [12] - Commercial Banking reported revenue of$ 3.6 billion, up 3% year-on-year [13] Company Strategy and Development Direction - The company plans to maintain a CET1 ratio of 15% to prepare for Basel III endgame, indicating a cautious approach to capital management [23] - The firm is focused on using capital to build the business first, pay dividends, and then consider stock buybacks [24] - The company is optimistic about the Investment Banking pipeline but cautious about regulatory headwinds affecting M&A activity [62] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in consumer and business health, citing low unemployment and rising asset prices [42] - There is caution regarding potential economic inflection points and geopolitical risks that could impact future performance [44] - The outlook for NII ex-Markets is approximately $89 billion, with expectations of ongoing deposit migration [17][30] Other Important Information - The effective tax rate has increased to around 23% for the year, driven by the adoption of the proportional amortization method for certain tax equity investments [18] - The company expects to continue facing economic, geopolitical, and regulatory uncertainties [19] Q&A Session All Questions and Answers Question: Dividend increase and payout ratio - Management indicated that the dividend was increased due to strong earnings, aiming for a payout ratio around one-third of normalized earnings [21][22] Question: Deposit migration trends - Management noted that migration from checking and savings to CDs continues, with no significant change in trends observed [27][30] Question: Card growth and reserve build - Management confirmed that the lack of reserve build this quarter was seasonal, with expectations for continued card loan growth [35][36] Question: Investment Banking pipeline and M&A activity - Management expressed cautious optimism about the Investment Banking pipeline but noted regulatory headwinds could impact M&A activity [60][62] Question: Health of the wholesale payments business - Management reported strong performance in the wholesale payments business, attributing it to ongoing investment and the essential nature of payment services [68][71]