Last week, JP Morgan released its Q1 2024 results. The quarterly net revenue increased to $41.9 billion, marking a 9% increase from the preceding quarter. Net income also saw a significant increase, reaching $13.4 billion, up 44% from the previous quarter. Provisions for credit losses witnessed a decline of 32%, settling at $1.9 billion. JP Morgan upheld a steady return on equity of 17%.
Despite the increase in revenue, Net Interest Income (NII) declined 4% due to deposit margin compression and the overall amount of deposits decreasing. This was mainly seen in the Consumer and Community Banking (CCB) section of JP Morgan. However, due to the rise in the US equities market last year, CCB investment assets were up 25%.
JP Morgan expressed that despite the strong economic indicators, such as the strong unemployment rate and wages in the US, there is still a lot of uncertainty in the market such as the ongoing geopolitical tensions and a large number of persistent inflationary pressures. JP Morgan also highlighted that the bank has not experienced this level of quantitative tightening at this scale before. The effects are likely only going to be seen over the long term. These comments likely caused the stock price to slide by just over 6% following the results disclosure.
JP Morgan benefitted from the recent regional banking crisis in the US when they purchased First Republic. This contributed to their growth in assets, revenues, and profits. JP Morgan prides itself on its “fortress balance sheet”; which in turn allows it to take advantage of large deals when they become available.
JP Morgan is held in the Lunar BCI Worldwide Flexible Fund and by Lunar Capital’s Offshore Portfolio clients.
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This stocktake is prepared for the clients of Lunar Capital (Pty) Ltd. This stocktake does not constitute financial advice and is generated for information purposes only.
