JPMorgan Chase & Co. (NYSE:JPM) Q1 2017 Earnings Conference Call - Preliminary Transcript

Apr 13, 2017 • 08:30 am ET

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JPMorgan Chase & Co. (NYSE:JPM) Q1 2017 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Good morning, ladies and gentlemen. Welcome to JPMorgan Chase's First Quarter 2017 Earnings Call. This call is being recorded. Your line will be muted for the duration of the call. We will now go live to the presentation. Please stand-by. At this time, I would like to turn the call over to JPMorgan Chase's Chairman and CEO, Jamie Dimon, and Chief Financial Officer, Marianne Lake. Ms. Lake, please go ahead.

Executive
Marianne Lake

Thanks operator and good morning everyone. I'm going to take you through the earnings presentation which is available on our website. Please refer to the disclaimer at the back of the presentation. Starting on page one, we are off to a good start this year with net income of $6.4 billion, EPS of $1.65, and the return on tangible common equity of 13% on revenue of $25.6 billion with the continuing momentum from last year driving strong performance across all of our businesses.

Highlights for the quarter include average core loan growth of 9% year-on-year, reflecting growth trends across products; continued double-digit consumer deposit growth; strong card sales, up 15%; and Merchant volume up 11%. In addition, we achieved a number of records across our businesses, most notably net income and IB fees for a first quarter in the CIB; net income and revenue for the commercial bank; and asset under management and banking balances in asset and wealth management.

Overall, the credit environment remained benign. In consumer, there were no reserve actions taken across our core portfolios while in wholesale we had a net reserve release of about $90 million driven by energy, resulting in net releases in both the CIB and the commercial bank. We see no significant items here on the page, but there are a few notable items in our results that I will highlight here too. The first is the tax benefit, a bit less than $400 million and the benefit relates to the difference in stock price between vesting date and grant date for our employee equity award.

And while such an adjustment is business as usual, the recent appreciation in our stock price has caused the benefit to be outside this quarter with the largest impact occurring to CIB and to a lesser extent asset and wealth management. Second is a write-down of our student loan portfolio of approximately $160 million after tax as we move these loans to held-for-sale and explore alternatives to that portfolio. And last is Firm-wide legal expense of around $140 million after tax relating to a number of matters across businesses, some positive and negative, and with the most significant impact being in the AWM business.

Moving on to page two and some more detail about the first quarter. Revenues of $25.6 billion was up $1.5 billion or 6% year-on-year with the increase evenly split between net interest income and non-interest revenue. NII reflected the impact of higher rates and continued growth, and NII reflected higher CIB revenues, partially offset by card acquisition cost and lower MSR risk management.