JPMorgan Stock Topped The Consensus In Q2

JPMorgan’s stock (NYSE: JPM) has gained 16% YTD, as compared to the 18% rise in the S&P500 over the same period. Further, the stock is currently trading at $156 per share, which is 8% below its fair value of $169 – Trefis’ estimate for JPMorgan’s valuation. The bank surpassed the street estimates in the second quarter of 2023. It reported net revenues of $41.3 billion – up 34% y-o-y, primarily driven by a 36% increase in consumer & community banking, a 48% jump in commercial banking, and a 13% rise in the asset & wealth management segment. This was partly due to organic growth and partly because of the acquisition of the First Republic Bank in May. Overall, the net interest income increased 44% y-o-y, followed by a 25% growth in non-interest revenues. On the flip side, the provisions for credit losses witnessed an unfavorable increase in the quarter from $1.1 billion to $2.9 billion. However, it was somewhat offset by a drop in noninterest expenses as a % of revenues. Altogether, the net income increased 67% y-o-y to $14.47 billion.

The company recently announced that it has successfully completed the Federal Reserve’s 2023 Comprehensive Capital Analysis and Review (“CCAR”) stress test process. Further, it intends to increase the quarterly common stock dividend from $1.00 per share to $1.05 per share (subject to approval by the board). Notably, the CCAR exercise is conducted every year by the Fed to analyze the strength of the country’s largest financial institutions under conditions simulating economic downturn (similar to 2008).