JPM posts record sales in US, indices takeover stocks

J.P. Morgan has reported net income of US$11.0 billion in Q4 2022, a 5.9% increase year-on-year, driven by higher net interest income. Net revenues rose 29% to US$15.8 billion YoY.

The corporate & investment bank (CIB) posted net revenues of US$3.3 billion, down 27% from the prior-year period. Total markets revenue was up seven percent to US$5.7 billion - fixed income was up 12% and equity down one percent.

By segment, banking revenue dropped 28% to US$3.8 billion while markets & securities services revenue climbed eight percent to US$6.8 billion at CIB YoY.

‘In the CIB, markets revenue rose 7% as client activity remained strong in fixed income. Global investment banking fees were down significantly in a challenging environment,’ said Jamie Dimon (pictured), J.P. Morgan’s chairman and CEO.

The bank’s commercial banking business generated net income of US$1.4 billion, 15% higher YoY, driven by ‘higher deposit margins, partially offset by lower investment banking revenue and deposit-related fees’.

For the asset & wealth management (AWM), net income reached US$1.1 billion, up one percent. Asset management and global private bank contributed to revenues of US$2.2 billion and US$2.4 billion, respectively.

Assets under management amounted to US$2.8 trillion, down 11%, due to ‘lower market levels and net outflows from liquidity’.

On a full-year basis, revenues increased 5.6% to US$132.3 billion in 2022 YoY. Net income decreased 22.2% to US$37.7 billion mainly due to US$6.4 billion credit costs.

Structured products

J.P. Morgan had a 13.04% share of the US retail structured products market in Q4 2022, making it the third most active issuer in the quarter, after Citi (15.98%) and Goldman Sachs (15.49%), according to SRP data.

The bank collected US$2.7 billion from 1,633 products between 1 October and 31 December 2022, a 9.8% decrease in sales volume YoY (Q4 2021: US$3.0 billion from 1,428 products).

For full-year 2022, the sales reached US$14.5 billion on back of 7,297 products, an increase from US$12 billion from 2021. It also represented another record-high level achieved by the bank after 2021 since the launch of the SRP US database in 2005.

Equities continued to dominate the underlyings in Q4 22, with products linked to single index accounting for both the highest issuance (646 products) and the largest volumes (US$1.3 billion), replacing single stocks seen in the prior-year period.

By sales volume, the most popular underliers were the S&P 500 (US$999.5m), Russell 2000 (US$80.8m), Eurostoxx 50 (US$34.9m) and MSCI EAFE (US$27.1m), excluding 42 products tied to unspecified single index. MerQube US Tech+ Vol Advantage Index, MerQube US Large-Cap Vol Advantage Index and J.P. Morgan Kronos+ Index gained traction in terms of issuance, which was 58, 39 and 18, respectively.

Back in Q4 21, the trigger autocallable contingent coupon yield notes on the common stock of Apple was the bank’s best-selling product for the quarter on the back of US$31.4m in sales.

Next in line were products linked to index baskets (US$838.5m from 538 products), single stocks (US$177.5m from 131 products), hybrid assets (US$167.6m from 159 products), ETFs (US$157.4m from 92 products) and share baskets (US$42.1m from 44 products).

The bank also marketed 23 products tracking foreign exchange (FX) with a total traded notional of US$3.2m including USD/BRL, EUR/USD, JPY/USD, GBP/USD, CAD/USD and AUD/USD currency pairs.

Outside of the US, the bank focused on the issuance of listed certificates in Germany, where it was the second most active manufacturer of leverage products by issuance through 38,656 turbos in Q4 22.

In Asia, 976 listed structured products (derivative warrants and callable bull/bear contracts) were marketed by the US bank and eight structured notes were issued in Taiwan.

Click here to read the full J.P. Morgan Q4 2022 presentation.