JPMorgan Chase stock dips as guidance remains little changed, Q1 earnings beat (NYSE:JPM)

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JPMorgan Chase (NYSE:JPM) stock slid 3.5% in Friday premarket trading after the bank’s net interest income (“NII”) guidance was little changed, even as markets are pricing in fewer interest rate cuts by the Federal Reserve this year.

The U.S.’s largest bank by assets expects full-year net interest income of ~$90B, the same as its prior guidance, but now sees NII, excluding markets, of $89B, from its prior outlook of ~$88B. Visible Alpha consensus for 2024 NII is $90.4B.

“This quarter, NII declined 4% sequentially, and as expected, NII ex. Markets declined 2% 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,” said Chairman and CEO Jamie Dimon.

The company is remaining “alert to a number of significant uncertain forces,” he added, including geopolitical tensions, inflationary pressures, and further effects from the Federal Reserve’s quantitative tightening.

In other guidance, JPMorgan (JPM) expects adjusted expense to be ~$91B vs. its prior guidance of ~$90B.

The bank card services net charge-off rate is projected to be less than 3.50% vs. its previous guidance of 3.50%.

Q1 non-GAAP EPS of $4.63, topping the average analyst estimate of $4.13, increased from $3.97 in Q4 2023 and $4.10 in Q1 2023. The current quarter figure excluded a $725M increase to the bank’s FDIC special assessment.

Adjusted revenue of $42.5B compares with $39.9B in the previous quarter and $39.3B a year ago.

Provision for credit losses was $1.88B, vs. the Visible Alpha consensus of $2.74B and compared with $2.76B in Q4 and $2.28B in Q1 2023.

Net interest income of $23.1B, meeting the $23.1B Visible Alpha estimate, declined from $24.05B in the prior quarter and increased from $20.7B a year ago.

JPMorgan Chase’s (JPM) total loans at March 31, 2024, stood at $1.31T vs. $1.32T at Dec. 31, 2023. Deposits, at $2.43T rose from $2.40T at the end of Q4.

Q1 noninterest expense was $22.8B, dropping from $24.5B in the previous quarter and rising from $20.1B a year ago.

Q1 revenue and net income by segment:

Consumer & Community Banking revenue of $17.6B fell 2% Q/Q and rose 7% Y/Y; net income of $4.83B increased 1% Q/Q and dropped 8% Y/Y.

Corporate & Investment Banking revenue of $13.6B jumped 24% Q/Q and was essentially flat Y/Y; net income of $4.75B surged 88% Q/Q and rose 8% Y/Y. Investment Banking revenue rose 21% Y/Y, driven by higher debt and equity underwriting fees. Markets & Securities Services revenue fell 2% Y/Y, with Markets revenue down 5% and Fixed Income Markets revenue down 7%.

Commercial Banking revenue of $3.95B slipped 2% Q/Q and rose 13% Y/Y; net income of $1.87B rose 13% Q/Q and 39% Y/Y.

Asset & Wealth Management revenue of $5.11B climbed 14% Q/Q and 7% Y/Y; net income of $1.29B rose 6% Q/Q and fell 6% Y/Y

Conference call at 8:30 AM ET.

Earlier, JPMorgan Chase non-GAAP EPS of $4.63 beats by $0.50, revenue of $41.93B beats by $240M