JPM Stock Fizzles Despite Blowout Quarter As Key Forecast Cut
One day after Goldman Sachs reported its highest profit in 5 years (despite an ugly miss in FICC revenues), this morning JPMorgan impressed with just as solid results, when it reported that its Q1 profits rose 13% as the bank benefited from soaring market volatility and frantic trading amid the war with Iran and the US military operation in Venezuela.
The largest US bank reported net income of $16.5bn, beating analyst estimates of a $15.2bn print, up from $14.6bn a year ago and the bank’s second-best quarter ever. Its best quarter remains the $18.1bn the bank earned in the second quarter of 2024 when JPMorgan benefited from a one-off gain from the sale of its stake in Visa.
One-upping Goldman, JPM reported the best quarter for trading in the bank’s history, boosted by the swings in equity and fixed income markets caused by geopolitical shocks. And unlike Goldman, JPM's FICC also came in much stronger than expected; in fact at $7.1bn it was the second biggest FICC revenue on record.
The bank reported total trading revenues of $11.6bn, up 20% from the first quarter a year ago, which is a seasonally strong period for the business. It was the highest figure on record for the bank, beating its previous record from 2020.
Revenues from FICC rose 21% to $7.1bn, and beating estimates of $6.7bn; As we reported yesterday, Rival Goldman Sachs on Monday fell far short of what investors were anticipating from its fixed-income business. JPMorgan’s equities trading revenues also rose more than expected, up 17.5% to $4.5bn, and above estimates of $4.31bn.
Investment-banking fees of $2.88 billion also beat analysts’ expectations of $2.6 billion: this was JPM's best quarter for the business since the end of 2021. It just beat the $2.8 bilion reported by rival Goldman Sachs on Monday, but Goldman’s year-on-year increase was higher at nearly 50%. Dealmakers advising on mergers and acquisitions were the standout, notching an 82% jump to $1.27 billion. Equity underwriting also rose more than expected to $472 million, while a 7% drop in debt-underwriting fees came in line with estimates.
Here is the top highlights from the company's Q1 results, which also handily beat expectations:
- Adjusted revenue $50.54 billion, beating estimates $49.26 billion
- FICC sales & trading revenue $7.08 billion, +21% y/y, beating estimate $6.65 billion
- Equities sales & trading revenue $4.48 billion, +17.5% y/y, beating estimates $4.31 billion
- Investment banking revenue $3.14 billion, +38% y/y, beating estimate $2.73 billion
- Advisory revenue $1.27 billion, +82% y/y, beating estimate $1.01 billion
- Equity underwriting rev. $472 million, +46% y/y, beating estimate $453.2 million
- Debt underwriting rev. $1.15 billion, -6.9% y/y, matching estimate $1.15 billion
JPM also reported managed Net Interest Income (ex. Markets) of $25.48BN, up 9% YoY, and above estimates of $25.18BN, driven by higher deposit balances, as well as higher revolving balances in Card Services, predominantly offset by the impact of lower rates. Costs, meanwhile, were $26.9 billion in the quarter, higher than expected. JPMorgan said in February that it expects to spend about $105 billion this year, excluding legal expenses, and it reaffirmed that figure Tuesday.
Commenting on the quarter, the bank's CEO Jamie Dimon said the firm delivered strong results in 1Q and consumer spending was still strong, businesses were healthy and the US economy “remained resilient”.
“Several tailwinds are supporting this resiliency, including increased fiscal stimulus, the benefits of deregulation, AI-driven capital investment and the Fed’s asset purchases,” Dimon said in a statement alongside the bank’s earnings.
“At the same time, there is an increasingly complex set of risks — such as geopolitical tensions and wars, energy price volatility, trade uncertainty, large global fiscal deficits and elevated asset prices. “While we cannot predict how these risks and uncertainties will ultimately play out, they are significant and reinforce why we prepare the Firm for a wide range of environments,” he said
As usual, JPM paraded with its "fortress balance sheet"...
... with the following key updates for Q1:
- Net yield on interest-earning assets 2.5%, estimate 2.57%
- Standardized CET1 ratio 14.3%
- Managed overhead ratio 53%, estimate 52.8%
- Return on equity 19%, estimate 17.3%
- Return on tangible common equity 23%, estimate 20.7%
- Assets under management $4.79 trillion, estimate $4.89 trillion
- Tangible book value per share $108.87, estimate $109.28
- Book value per share $128.38, estimate $129.35
- Cash and due from banks $22.04 billion, estimate $21.74 billion
- Loans $1.50 trillion, below estimates of $1.5 trillion
- Total deposits $2.68 trillion, above estimates of $2.58 trillion
- Provision for credit losses $2.51 billion
- Net charge-offs $2.32 billion, below estimate $2.63 billion
And some other notable highlights from the quarter:
- Compensation expenses $15.34 billion, estimate $15.04 billion
- Non-interest expenses $26.85 billion, estimate $26.03 billion
Of note, JPMorgan increased the reserves set aside for potentially soured loans by only $191 million in the first quarter, less than analysts expected. That included a net build for the wholesale side, partially offset by a net release in consumer. With JPMorgan's net charge offs coming in below estimates, it appears that JPM was positioned well for the ongoing private credit meltdown.
“In the great scheme of things, private credit probably does not present a systemic risk,” Dimon wrote in his annual letter to shareholders earlier this month. “When we have a credit cycle, which will happen one day, losses on all leveraged lending in general will be higher than expected, relative to the environment. This is because credit standards have been modestly weakening pretty much across the board.”
The $1.8 trillion private-credit industry has been a focal point amid mounting concern that redemption requests and fears over the impact of artificial intelligence will weigh on the sector. For banks, that’s translated to investor questions about their lending to the industry. Earlier this year, JPMorgan marked down the value of certain loans that serve as collateral against the bank’s loans to private-credit funds.
Jamie Dimon said losses in private credit will have to be “very large” before banks like JPMorgan Chase face a significant hit from it. “You'll have very large losses in private credit before, at least it looks like, banks can get hit or something like that,” Dimon told analysts. “So it doesn't mean you won't feel some stress and strain, and you might have to do something about it. But I’m not particularly worried about it. I'd be more worried about when there's a credit cycle, how's that going to filter through the whole system.”
JPM CFO Jeremy Barnum said the bank is “reasonably comfortable” with its exposure to private credit, but cautioned that losses will increase if the credit cycle turns. He told reporters that "we’re reasonably comfortable with our exposure. But obviously, if you see a big credit cycle with significant increase in default rates, you’re going to see some losses across the whole system, including banks. And that’s just part of the business."
Wealthy investors attempted to pull more than $20bn from private credit funds in the first quarter, underscoring the growing strain on an asset class that had boomed into a dominant force on Wall Street.
But while its earnings were solid across the board, one reason why JPM stock dipped in kneejerk reaction and was currently unchanged is that the bank trimmed its forecast for net interest income for 2026. JPMorgan said it expected net interest income of about $103bn this year, down from the $104.5bn it forecast in February. Net interest income was almost $96bn in 2025. Excluding lending in its trading division, JPMorgan left unchanged its guidance for net interest income this year of around $95bn.
Shares traded about 3% lower in the immediate aftermath of JPMorgan’s results announcement, but recovered some of their losses to trade less than 1% below Monday’s close.
Full earnings presentation below (pdf link)