EPS of $6.12 increased by 28.8% from previous year
Gross margin of 100.0%
Net income of 18.15B
""The reported performance for the quarter was exceptional and actually represents record revenue and net income," - Jeremy Barnum, CFO." - Jeremy Barnum
In the second quarter of 2024, JPMorgan Chase Co demonstrated robust financial performance, reporting net income of $18.1 billion, which translates to earnings per share (EPS) of $6.12. This marks a substantial increase from prior periods, supported by significant non-recurring gains related to Visa shares. Management highlighted that underlying performance, when adjusted for these anomalies, reflected a solid core profitability with net income of $13.1 billion and adjusted EPS of $4.40. Total revenues surged to $51 billion, marking a year-on-year increase of 20%, indicating strong operational growth across key business segments, particularly in investment banking and asset management. Management's focus on maintaining disciplined execution amidst ongoing market challenges positions the firm favorably for sustained growth.
**Operating Income:** $26.4 billion, representing an operating margin of 52.8%.
**CET1 Ratio:** Improved to 15.3%, up 30 basis points from Q1 2024.
**Total Assets:** $4.14 trillion, a sign of significant asset growth, supported by effective capital management.
Financial Highlights
1. Revenue Growth: Total revenue reached $51 billion, a 20% increase year-over-year, driven primarily by investment banking fees which rose 50% year-on-year.
2. Profitability Metrics:
- Net Income: $18.1 billion (25.41% YoY increase).
- EPS: $6.12, up 28.78% YoY.
- Operating Income: $26.4 billion, representing an operating margin of 52.8%.
3. Balance Sheet Strength:
- CET1 Ratio: Improved to 15.3%, up 30 basis points from Q1 2024.
- Total Assets: $4.14 trillion, a sign of significant asset growth, supported by effective capital management.
4. Cash Flow: Generated operating cash flow of $38.5 billion, providing solid coverage for debt and dividend payments.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
50.06B
29.74%
19.45%
Gross Profit
50.06B
29.74%
19.45%
Operating Income
26.44B
51.42%
34.83%
Net Income
18.15B
25.41%
35.25%
EPS
6.13
28.78%
37.75%
Key Financial Ratios
currentRatio
1.46
grossProfitMargin
100%
operatingProfitMargin
52.8%
netProfitMargin
36.3%
returnOnAssets
0.44%
returnOnEquity
5.33%
debtEquityRatio
2.58
operatingCashFlowPerShare
$13.31
freeCashFlowPerShare
$13.31
dividendPayoutRatio
20.8%
priceToBookRatio
1.74
priceEarningsRatio
8.18
Net Income vs. Revenue
Expense Breakdown
Management Commentary
1. Growth Strategies: Jeremy Barnum, CFO, emphasized, "We had a record number of first-time investors and continued to see strong net inflows across AWM."
2. Investment Banking Performance: The CFO noted, "IB fees were up 50% year-on-year and our advisory fees were up 45%, reflecting the closing of significant deals."
3. Cost Management: On expenses, Barnum stated, "Expenses of $23.7 billion were up 14% year-on-year, driven primarily by increased compensation tied to revenue growth."
4. Outlook on Capital: Regarding future capital dynamics, Barnum mentioned, "Our current practice on capital return and buybacks does lead to an ever-expanding CET1 ratio...but we will be patient as we evaluate opportunities."
"The reported performance for the quarter was exceptional and actually represents record revenue and net income," - Jeremy Barnum, CFO.
— Jeremy Barnum
"We expect NII to normalize higher; however, it is too early to call the end of the over-earning narrative," - Jeremy Barnum, CFO.
— Jeremy Barnum
Forward Guidance
Management has maintained its guidance for NII and NII ex-markets at approximately $91 billion for 2024, with an anticipated increase in the quarterly dividend to $1.25 per share in Q3 2024. They voiced cautious optimism regarding the macroeconomic outlook, citing ongoing risks but also recognizing the potential for normalized higher net interest income as pressures on deposit margins appear to moderate. Management indicated the expectation for net charge-offs to stabilize around 3.4% for credit cards, providing a clear watch factor for investors.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
JPM Focus
1.00%
52.80%
5.33%
8.18%
C
1.00%
34.40%
1.54%
9.40%
WFC
1.00%
35.70%
2.78%
10.98%
TD
1.00%
40.10%
2.29%
14.04%
NU
47.70%
25.50%
7.04%
30.36%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
JPMorgan Chase's Q2 2024 performance underscores the bank's resilience and capacity for growth in a complex market environment. Despite existing risks related to competitive pressures and economic conditions, the firm is well-positioned to capitalize on opportunities in investment banking and wealth management. Given its solid financial positioning, sound management strategies, and positive outlook, JPM represents a compelling investment opportunity, especially for those seeking exposure in the financial services sector.
Key Investment Factors
Growth Potential
Robust growth in investment banking and asset management suggests high growth potential. The continued focus on digital banking and organic growth strategies further enhances this outlook.
Profitability Risk
Persistent pressure on deposit margins, potential economic headwinds, and competitive landscape risks remain prominent. The normalization of credit conditions could also impact profitability.
Financial Position
The firm’s healthy CET1 ratio of 15.3% underscores its strong capital position, vital for weathering market fluctuations and supporting growth initiatives.
SWOT Analysis
Strengths
Strong brand and market position within the banking sector
Diverse revenue streams across investment banking, retail banking, and asset management
Robust financial health with high CET1 ratio indicating solid capital management
Weaknesses
Dependency on investment banking revenues which can be volatile
High operational expenses related to growth initiatives may pressure profit margins
Opportunities
Expansion into digital banking and fintech solutions
Increasing wealth management services catering to affluent clients
Potential for increased investment activity as market conditions improve
Threats
Rising interest rates affecting loan demand and margin pressures
Intense competition from both traditional and non-traditional financial services firms
Economic conditions impacting consumer and commercial credit quality