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James Li
James Li
Articles (638)  | Author's Website |

JPMorgan Reports Strong Revenue Growth in 1st Quarter

Bank reports earnings beat

April 13, 2018 | About:

JPMorgan Chase & Co. (NYSE:JPM), a major global bank, said first-quarter net revenues increased 10% due to higher net interest income and slightly lower provision for credit losses.

The New York-based bank reported earnings of $2.37 per share, outperforming analyst estimates by approximately 9 cents per share.

Brief summary of earnings

CEO Jamie Dimon said the bank delivered “strong top-line growth and building on the momentum from last year.” JPMorgan maintained its number one rank in global investment banking fees and mergers and acquisitions. The bank also saw double-digit revenue growth in its Treasury Services and Securities Services businesses, suggesting that multiyear investments are paying off.

Net interest income increased 9% from the prior-year quarter primarily due to higher rates and loan growth. Even though the bank reported a 7% decline in investment banking revenues, noninterest income grew 12% year over year, driven by strong growth in auto lease income and asset and wealth management fees.

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Dimon concluded that the continued optimism about the “upbeat” business sentiment and positive impacts of tax reform enable JPMorgan to “drive inclusive economic growth” across the U.S. The bank reported a $240 million decline in income tax expenses even though pretax incomes increased $2 billion, reflecting lower effective tax rates.

Oakmark fund manager discloses JPMorgan sell in shareholder letter

Oakmark Fund manager Bill Nygren (Trades, Portfolio) disclosed the firm divested its position in JPMorgan in his March 31 shareholder letter. Nygren mentioned in a CNBC interview that while JPMorgan is “viewed to be the most superior of the banks,” its price-to-tangible book ratio of 2.17 is significantly high compared to those of Oakmark’s other bank holdings, which are Bank of America Corp. (NYSE:BAC), Citigroup Inc. (NYSE:C) and Wells Fargo & Co. (NYSE:WFC). JPMorgan’s price-to-tangible book ratio underperforms 87% of global banks, i.e., the bank trades at a higher tangible book multiple than 87% of its competitors. Despite this, Oakmark strongly believes banks will have a good earnings season, highlighted by “higher pretax income, lower tax rates and fewer shares outstanding.”

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See also

GuruFocus recently released two new features that enable advanced research: the FilingWiz and the industry overview pages. The former allows you to interact with quarterly and annual report filings from the Securities and Exchange Commission, while the latter allows you to view the historical median price valuations for a specific industry or market sector.

Disclosure: No positions.

About the author:

James Li
I am an editorial assistant and researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

Visit James Li's Website


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