JP Morgan and the Fortress Balance Sheet

JP Morgan and the Fortress Balance Sheet

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.

Key Indicators
Index / Fund / Rate
Start of Year
Last Week
This Week
% Change YTD
Index / Fund / Rate
Start of Year
188.33
Last Week
200.74
This Week
203.47
% Change YTD
8.04% Lunar Capital increasesymbol
Index / Fund / Rate
JSE ALSI
Start of Year
76 893
Last Week
74 775
This Week
75 312 Lunar Capital increasesymbol
% Change YTD
-2.06% Lunar Capital stocktake arrow down
Index / Fund / Rate
NASDAQ Composite
Start of Year
15 011
Last Week
16 250
This Week
16 175 Lunar Capital stocktake arrow down
% Change YTD
7.75% Lunar Capital increasesymbol
Index / Fund / Rate
S&P 500
Start of Year
4 770
Last Week
5 204
This Week
5 123 Lunar Capital stocktake arrow down
% Change YTD
7.41% Lunar Capital increasesymbol
Index / Fund / Rate
Prime Lending Rate
Start of Year
11.75%
Last Week
11.75%
This Week
11.75%
% Change YTD
0.00%
Index / Fund / Rate
USD/ZAR
Start of Year
18.30
Last Week
18.70
This Week
18.84 Lunar Capital increasesymbol
% Change YTD
2.95% Lunar Capital increasesymbol
Index / Fund / Rate
EUR/ZAR
Start of Year
20.17
Last Week
20.27
This Week
20.09 Lunar Capital stocktake arrow down
% Change YTD
-0.40% Lunar Capital stocktake arrow down
Index / Fund / Rate
Brent Crude ($'barrel)
Start of Year
76.97
Last Week
90.87
This Week
90.18 Lunar Capital stocktake arrow down
% Change YTD
17.16% Lunar Capital increasesymbol
Source: Iress

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Disclosures
Lunar Capital (Pty) Ltd is a registered Financial Services Provider. FSP (46567)
Read our full Disclosure statement: https://lunarcapital.co.za/disclosures/
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The Lunar BCI Worldwide Flexible Fund Fact Sheet  can be read here.
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.

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