JPM net profit up 35%, continues to lead league table

The US bank has delivered improved results in Q3 23 as increasing borrowing costs and its acquisition of failed First Republic Bank lifted the bank’s income.

We acknowledge that these results benefit from our over-earning on both net interest income and below normal credit costs, both of which will normalise over time - Jamie Dimon

Net revenues climbed 22% to US$39.9 billion while non-interest expenses increased 13% to US$21.8 billion in Q2 23.

With US$1.4 billion provision for credit losses set side, net income was up 35% to US$13.2 billion YoY.

Return on equity (RoE) and return on average tangible common shareholders’ equity (ROTCE) reached 18% and 22%, respectively.

‘[…] we acknowledge that these results benefit from our over-earning on both net interest income and below normal credit costs, both of which will normalise over time,’ said Jamie Dimon (pictured), chairman and CEO.

According to Dimon, the bank intended to adapt and manage to the new rules quickly looking ahead to Basel III finalization -  ‘…we caution that such material regulatory changes would likely have real world consequences for markets and end users,’ he said.

Structured products

During the quarter, JPM has kept its crown at the US retail structured note market on the back of 2,158 issuance at US$6.1 billion YoY (Q3 22: US$6.0 billion from 2,253 products). That translated to 18% market share among a total of 15 issuer groups, according to SRP data.   

Following at a distance is Citi, which collected US$4.0 billion from 1,194 products, and Goldman Sachs, which sold US$3.6 billion with 962 products. The issuance volume represented a respective 13.0% and 7.7% decline in Q2 23 YoY.  

In terms of underlying assets, single index remains the preferred underlying with 802 issuances sold at US$2.4 billion (Q3 22: US$2.5 billion from 781 products). Index basket has gained momentum as the sales volume has increased 59.9% to US$1.8 billion from 757 products.

The underlying indices are provided by a group of 10 including J.P. Morgan itself, which accounted for 48 products. Bloomberg, Tokyo Stock Exchange, Invesco, MSCI and BlackRock are in the list on top of Qontigo, Nasdaq, FTSE Russell and S&P Dow Jones Indices.

Solactive indices were not used as JPM’s underlying in Q3 23. In the prior-year quarter, there were six newly-issued products linked to the Solactive Ensemble AI Large Blend PR Index. 

A pullback was observed on single stocks, exchange-traded funds (ETFs) and hybrid assets - the respective issuance volumes stood at US$529.3m (Q2 22: US$583.5m), US$220.1m (Q2 22: US$216.5m) and US$136.6m (Q2 22: US$389.7m). 

There were additional 74 issuance linked to interest rate, 50 to stock basket, 43 to commodity, two to foreign exchange (FX) rates and two to credit, SRP data shows.

In Europe, J.P. Morgan was the issuer of 51,442 listed structured products in Germany in Q3 23, an increase from 33,642 YoY, around half of which were also listed in Austria.

The US bank also issued 3,500 autocallable notes in Switzerland, 701 listed structured products in Hong Kong SAR and 201 structured notes in Taiwan.

The issuance in Switzerland comprises 3,416 certificates and 84 medium term notes, covering a total of 596 underlying assets led by stocks in technology and automobile.

Divisional breakdown

Corporate and investment banking (CIB) division posted US$1.1 billion net income in Q3 23, down 10% YoY.

Net revenue reached US$11.7 billion as banking and markets & securities services (MSS) units each fell two percent to US$4.0 billion and US$7.7 billion, respectively.

Specifically, markets revenue dropped three percent to US$6.6 billion.

Fixed income markets revenue was rose one percent to US$4.5 billion driven by higher revenue in securitized products and credit, predominantly offset by lower revenue in currencies & emerging markets.

Equity markets revenue decreased 10% to US$2.1 billion, driven by lower revenue across products when compared with a strong third quarter in the prior year.

Securities Services revenue went up nine percent to US$1.2 billion, driven by higher rates, partially offset by lower deposit balances.

At consumer & community banking (CCB), net income was 36% higher to US$5.9 billion as net revenue was up 29% to $18.4 billion.

Banking & Wealth Management net revenue was $11.3 billion, up 43%, while home lending and card services & auto contributed US$1.3 billion and 5.8 billion, respectively.

In the meantime, commercial banking (CB) posted net income of US$1.9 billion, up 105%, while asset & wealth management (AWM) saw net income of US$1.4 billion, up 16%. Net income at corporate was US$812m, compared with a net loss of $294 million in the prior year.

Click the link to read the full JPM Q2 23 earnings.