JPMorgan announced its quarterly results, and as expected, the world's largest bank surpassed analysts' expectations in both revenue and earnings per share.
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As anticipated, following the earnings report, JPMorgan's stock skyrocketed, closing Friday's session with a 4.44% rise!
Earnings
First of all, JPMorgan reported net earnings per share of $4.37, beating analysts' expectations of $3.98. Yes, you read that right—it crushed them! Although, compared to the previous quarter, there was a drop from $6.12, but in relation to last year, there was a slight increase from $4.33.
Why did the earnings drop compared to the previous quarter? The reason is that while interest income increased, reaching $23.4 billion (higher than the $22.7 billion expected), the bank made larger provisions for loan losses. In other words, it expects that many more people won't be able to repay their loans. Specifically, $3.11 billion in losses are expected, which is significantly higher than last year's $1.38 billion!
Okay, but why are they making such large provisions for loan losses? The answer is simple: the bank anticipates that macroeconomic conditions—namely the state of the global economy and geopolitics—will make it harder for many people to repay their loans.
Now, regarding revenue, the bank posted $42.7 billion, which is down from the $50.1 billion in the previous quarter but higher than the $40.7 billion during the same period last year. Where did this revenue come from? Let's break it down.
The Consumer & Community Banking division generated $17.8 billion in revenue, up 1% from the previous quarter but down 3% from last year.
Revenue from the Commercial & Investment Bank division reached $17 billion, which is 8% higher than last year, while the division's net earnings rose by 13%.
Lastly, the Asset & Wealth Management division brought in $5.44 billion, up 9% from last year, though net earnings were down by 5%.