JP Mor-Gains

Earnings season has started, and JP Morgan has released their Q2 2024 results. Net revenue for the quarter was $50.2 billion, up 22% year on year, while net income for the quarter was $18.1 billion. On May 6th, JP Morgan announced that it would exchange its Visa Class B-1 stock for Visa Class B-2 and Class C common stock, resulting in a one-time net gain of $7.9 billion for the company. After removing this net gain, contributions to JP Morgan’s Foundation, and discretionary security losses, JP Morgan’s adjusted net income stood at $13.1 billion. 

Jamie Dimon, the Chairman and CEO, noted significant achievements, including the opening of 450 thousand net new checking accounts and a 14% increase in investment assets, reaching $1 trillion. However, he also pointed out that lower-income customers are showing slight signs of stress due to high interest rates and persistent inflation, which have reduced their savings from pandemic levels. 

Dimon emphasized that JP Morgan remains cautious in the current market, citing the geopolitical situation as potentially the most dangerous since World War II. He also mentioned the uncertainty surrounding the full effects of the quantitative tightening carried out in 2022. Despite these challenges, JP Morgan’s robust balance sheet, with a standardized capital ratio of 15.3%, demonstrates the bank’s ability to handle a wide range of environments. 

After the collapse of Silicon Valley Bank in March 2023, Lunar Capital began acquiring JP Morgan stock in the Lunar BCI Worldwide Flexible Fund and for our offshore portfolio clients. Our view was that as smaller banks are under strain, the better-run banks, such as JP Morgan, would gain new customers and deposits. This increased market share and reduced competition provides an additional boost to the quality bank’s revenues, margins and profits.