JPMorgan posted stronger-than-expected first-quarter earnings Friday but noted a quarter-on-quarter decline in one of its key profit metrics, sending the shares lower in pre-market trading and clouding the impact of the banking sector on broader S&P 500 profits.
JPMorgan (JPM) said earnings for the three months ending in March were pegged at $4.44 a share, up 8.3% from the same period last year and well ahead of the Wall Street consensus forecast of $4.15 a share.
Reported revenue, JPMorgan said, rose 6.6% to $41.93 billion, topping analysts' estimates of a $41.84 billion tally. Managed revenue, however, was up 1.6% at $42.5 billion, topping Wall Street forecasts.
JPMorgan is the fifth largest bank in the world, with a market value of around $572 billion and around $3.2 trillion in assets under its umbrella.
Net interest income also impressed, rising 11% to $23.2 billion, thanks in part to the higher interest rate environment and a pullback in bets that the Federal Reserve will begin cutting rates later this spring.
Related: JP Morgan's stock hinges on one key metric in its earnings report
The bank did note, however, that net interest income was down 4% on a sequential basis, thanks to what it called "margin compression and lower deposit balances" but estimated it would rise to just under $90 billion, a tally that will likely top its overall expenses target.
"Many economic indicators continue to be favorable. However, looking ahead, we remain alert to a number of significant uncertain forces," said CEO Jamie Dimon, citing what he described as "terrible wars and violence (and) geopolitical tensions."
"Second, there seems to be a large number of persistent inflationary pressures, which may likely continue," he added. "And finally, we have never truly experienced the full effect of quantitative tightening on this scale.
"We do not know how these factors will play out, but we must prepare the firm for a wide range of potential environments to ensure that we can consistently be there for clients," Dimon concluded.
$JPM with double beat but NII outlook miss.
— The Transcript (@TheTranscript_) April 12, 2024
CEO: "This quarter, NII declined 4% sequentially...due to deposit margin compression and lower deposit balances, mostly in CCB. Looking ahead, we expect normalization to continue for both NII and credit costs"$JPM: -4.4% PM https://t.co/uTiYSy45GN pic.twitter.com/vpQgS4uLXd
JPMorgan shares were marked 5.33% lower in early Friday trading immediately following the earnings release to change hands at $185.05 each, a move that trims the stock's year-to-date gain to around 7%.
Related: Hot inflation report batters stocks; here's what happens next
The bank paid a $725 million as a 'Special Assessment' payout to the Federal Deposit Insurance Corporation, tied to the rescue of several regional banks last year, down from the $3 billion hit it booked over the fourth quarter.
It also set aside $1.88 billion to cover potential losses linked to bad loans on its books, down from the $2.28 billion charge it took last year.
Related: Veteran fund manager picks favorite stocks for 2024
