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JPMorgan Chase Just Set a High Bar for This Earnings Season

Matthew Frankel, CFP, The Motley Fool

First-quarter earnings season has gotten underway, and the big banks are always among the earliest companies to report their results. Before the market opened Friday, JPMorgan Chase (NYSE: JPM) led the way in releasing its numbers.

To the delight of its shareholders, the financial institution started things off on a high note. The bank handily beat expectations on both the top and bottom lines, and its results look rather strong throughout.

Inside a Chase banking branch lobby.

Image source: JPMorgan Chase.

By the numbers

To be sure, the top- and bottom-line numbers rarely tell the whole story of how any company is performing. Even so, these figures can give us the general tone of how a quarter went.

On that note, JPMorgan Chase earned $2.65 a share for the quarter versus expectations of $2.35 a share. And revenue of $29.9 billion came in $1.5 billion ahead of expectations. That's a big beat, and it certainly helps to explain why the stock is up more than 4% after earnings.

To get a real sense of how the bank's business is doing, and how it's performing relative to its peers, it's necessary to look beyond the headline numbers. But digging a little deeper, it becomes clear JPMorgan did pretty well across the board. As CEO Jamie Dimon said, "we had record revenue and net income, strong performance across each of our major businesses, and a more constructive environment."

Here are some key details investors need to know about Q1:

  • JPMorgan Chase generated an impressive 16% return on equity. While we've yet to hear from two of the "big four" banks (Wells Fargo also reported Friday morning), I'd be shocked if this wasn't the highest ROE among them by a wide margin.
  • The retail loan portfolio grew by 4% from a year ago, and deposits grew by 3%.
  • Credit cards continue to be a driver of growth, with sales volume up 10% year over year.
  • JPMorgan Chase's corporate and investment banking business had a strong quarter, with a 12% surge in advisory revenue and 21% growth in debt underwriting. Investment banking revenue grew by a staggering 44% from last year, to a record high for the bank.
  • Net interest income grew by 8% year over year thanks to higher market interest rates. Profit in the bank's retail lending operation increased by 19%, and was a particularly strong point.
  • The company spent $4.7 billion on stock buybacks, repurchasing about 1.3% of its outstanding shares during Q1.

A solid start to earnings season

It's tough to take issue with anything in JPMorgan Chase's Q1 report. Many experts had expressed concerns that this quarter's earnings would be weak, but based on JPMorgan Chase and Wells Fargo (NYSE: WFC), which also reported on Friday, things may not turn out so bad after all.

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Matthew Frankel, CFP has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.