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JPMorgan Chase Q1 Profit Falls, EPS Misses View

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US investment bank JPMorgan Chase & Co. (JPM), on Wednesday, reported a lower profit for the first quarter, largely reflecting a net credit reserve build of $902 million versus a net credit reserve release of $5.2 billion in the prior year.

The company's Q1 net income was $8.28 billion or $2.63 per share compared to $14.3 billion or $4.50 per share last year.

Managed net revenue for the quarter was $31.6 billion, down 5% from the previous year's $33.1 billion. Reported net revenue decreased 5% to $30.7 billion from $32.3 billion generated a year ago.

Analysts polled by Thomson Reuters expected the company report earnings of $2.69 per share and revenue of $30.86 billion for the quarter. Analysts' estimate typically exclude certain special items.

Net interest income was $14.0 billion, up 7%, and net interest income, excluding Markets, was $11.8 billion, up 9%, predominantly driven by balance sheet growth and higher rates, partially offset by lower net interest income associated with PPP loans.

Noninterest revenue was $17.6 billion, down 12%, driven by lower Investment Banking fees, losses on legacy equity investments compared to gains in the prior year and $394 million of net investment securities losses in Corporate, and lower net production revenue in Home Lending.

The provision for credit losses was $1.5 billion, reflecting a net reserve build of $902 million driven by increasing the probability of downside risks due to high inflation and the war in Ukraine, as well as accounting for Russia-associated exposure in CIB and AWM, and $582 million of net charge-offs

Consumer & Business Banking net revenue was $6.06 billion versus $5.6 billion reported in the same period of last year. Banking revenue was $4.2 billion, down 6% from the prior year's $4.5 billion.

Markets & Securities Services revenue was $9.3 billion, down 8%. Markets revenue was $8.8 billion, down 3%. Fixed Income Markets revenue was $5.7 billion, down 1%, hit by lower performance in Securitized Products, primarily offset by higher revenue in Currencies & Emerging Markets on elevated client activity in a volatile market.

Jamie Dimon, Chairman and CEO, said, "JPMorgan Chase generated a healthy $30 billion of revenue, $8.3 billion of earnings and an ROTCE of 16% in the first quarter after adding $902 million in credit reserves largely due to higher probabilities of downside risks. Lending strength continued with average firmwide loans up 5% while credit losses are still at historically low levels."

"We remain optimistic on the economy, at least for the short term - consumer and business balance sheets as well as consumer spending remain at healthy levels - but see significant geopolitical and economic challenges ahead due to high inflation, supply chain issues and the war in Ukraine," Dimon added.

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