JPM's Q4 Earnings Beat on Solid IB & Trading, NII Down on Lower Rates

Solid investment banking (IB) and trading performance drove JPMorgan’s JPM fourth-quarter 2024 earnings to $4.81 per share. The bottom line handily surpassed the Zacks Consensus Estimate of $4.03.See the Zacks Earnings Calendar to stay ahead of market-making news.Behind JPMorgan’s Headline NumbersAs expected, the IB business witnessed solid growth. Equity underwriting fees jumped 54% and debt underwriting fees grew 56%. Also, advisory fees rose 41%. Overall, total IB fees (in the Commercial & Investment Bank segment) were up 49% from the prior-year quarter to $2.48 billion. Markets revenues soared 21% to $7 billion. Specifically, fixed-income markets revenues jumped 50% to $5 billion, while equity trading numbers surged 22% to $2 billion. Our estimates for equity and fixed-income markets revenues were $2.56 billion and $4.26 billion, respectively.Among other positives, Consumer & Community Banking (CCB) average loan balances were up 1% year over year. Further, debit and credit card sales volume increased 8%. Also, mortgage fees and related income grew 43% to $376 million. We had projected the metric to be $396.9 million. Further, the company reported a fall in provision for credit losses in the quarter.On the other hand, relatively lower interest rates and a fall in consumer loan (excluding credit cards) balance (down 4% year over year) hurt net interest income (NII), while a decent growth in loan balance (up 2%) offered some support during the quarter. Management expects NII to be approximately $94 billion for this year aided by Markets NII. During the quarter, adjusted operating expenses witnessed a rise. Management expects adjusted non-interest expenses to be roughly $95 billion this year, up from $91.1 billion in 2024.JPM’s Revenues Jump, Expenses RiseNet revenues, as reported, were $42.77 billion, up 11% year over year. The top line outpaced the Zacks Consensus Estimate of $40.96 billion.NII fell 3% year over year to $23.35 billion. This was due to lower rates, a fall in deposit balances and deposit margin compression, partially offset by higher revolving balances in Card Services and the impact of the balance sheet mix. Our estimate for NII was $22.76 billion.Non-interest income jumped 34% to $19.42 billion. Our estimate for non-interest income was $16.73 billion.Non-interest expenses (on a managed basis) were $22.76 billion, down 7%. Excluding the $2.9 billion FDIC special assessment in the prior-year quarter, the metric was up 5%. This was mainly due to higher compensation expenses. We had projected non-interest expenses to be $22.99 billion.The performance of JPMorgan’s business segments, in terms of net income generation, was decent. The Commercial & Investment Bank, Asset & Wealth Management and Corporate segments witnessed a rise in net income on a year-over-year basis. On the other hand, the Consumer & Community Banking segment incurred losses. Overall, net income jumped 50% to $14 billion. We had projected net income to be $11.19 billion.JPMorgan’s Credit Quality: A Mixed BagProvision for credit losses was $2.63 billion, down 5% from the prior-year quarter. Our estimate for the metric was $2.47 billion.Net charge-offs (NCOs) grew 9% to $2.36 billion. Also, as of Dec. 31, 2024, non-performing assets (NPAs) were $9.29 billion, jumping 22%.JPM’s Capital Position SolidTier 1 capital ratio (estimated) was 16.8% at the fourth-quarter end, up from 16.6% in the prior-year quarter level. Tier 1 common equity capital ratio (estimated) was 15.7%, up from 15%. Total capital ratio was 18.5% (estimated), stable year over year.Book value per share was $116.07 as of Dec. 31, 2024, compared with $104.45 a year ago. Tangible book value per common share was $97.30 at the end of December 2024, up from $86.08.Update on JPMorgan’s Share RepurchasesDuring the reported quarter, JPMorgan repurchased 18.5 million shares for $4.3 billion.Our Viewpoint on JPMNew branch openings, strategic acquisitions, a global expansion plan, relatively high interest rates and decent loan demand are likely to keep supporting JPMorgan’s revenues. Further, a rebound in capital markets business will act as a tailwind. However, poor asset quality and mounting expenses are near-term concerns. JPMorgan Chase & Co. Price, Consensus and EPS Surprise JPMorgan Chase & Co. price-consensus-eps-surprise-chart | JPMorgan Chase & Co. QuoteJPMorgan currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Earnings Dates & Expectations of JPM’s PeersBank of America BAC is slated to report fourth-quarter and full-year 2024 numbers on Jan. 16.Over the past month, the Zacks Consensus Estimate for BAC’s quarterly earnings has been revised 1.3% upward to 78 cents. This indicates 11.4% growth from the prior-year quarter.Truist Financial TFC is scheduled to announce fourth-quarter and full-year 2024 results on Jan. 17.Over the past 30 days, the Zacks Consensus Estimate for TFC’s quarterly earnings has moved 1.1% downward to 87 cents. This implies a 7.4% rise from the prior-year quarter.Free Today: Profiting from The Future’s Brightest Energy SourceThe demand for electricity is growing exponentially. At the same time, we’re working to reduce our dependence on fossil fuels like oil and natural gas. 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(JPM): Free Stock Analysis Report Truist Financial Corporation (TFC): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks