JPMorgan Chase (JPM) earnings 1Q 2023

JPMorgan Chase posted record first-quarter revenue on Friday that topped analysts’ expectations as net interest income surged almost 50% from a year ago on higher rates.

Here’s what the company reported:

• Adjusted earnings: $4.32 per share vs. $3.41 per share Refinitiv estimate
• Revenue: $39.34 billion, vs. $36.19 billion

The bank said profit jumped 52% to $12.62 billion, or $4.10 per share, in the first three months of the year. That figure includes $868 million in losses on securities; excluding those losses lifts per share earnings by 22 cents, resulting in adjusted profit of $4.32 per share.

Companywide revenue rose 25% to $39.34 billion, driven by a 49% rise in net interest income to $20.8 billion, thanks to the Federal Reserve’s most aggressive rate-hiking campaign in decades.

Shares of the bank popped 6.1% in premarket trading.

“The U.S. economy continues to be on generally healthy footings —consumers are still spending and have strong balance sheets, and businesses are in good shape,” CEO Jamie Dimon said in the release.

“However, the storm clouds that we have been monitoring for the past year remain on the horizon, and the banking industry turmoil adds to these risks,” he said, adding that banks will likely rein in lending as they become more conservative ahead of a possible downturn.

JPMorgan, the biggest U.S. bank by assets, will be watched closely for clues on how the industry fared after the collapse of two regional lenders last month.

Analysts expect a mixed bag of conflicting trends. For instance, JPMorgan likely benefited from an influx of deposits after Silicon Valley Bank and Signature Bank experienced fatal bank runs.

But the industry has been forced to pay up for deposits as customers shift holdings into higher-yielding instruments like money market funds. That will probably curb banks’ gains from rising interest rates amid the Federal Reserve’s efforts to tame inflation.

The flow of deposits through American financial institutions is the top concern of analysts and investors this quarter. That’s because smaller banks faced pressure last month as customers sought the perceived safety of megabanks including JPMorgan and Bank of America. But the bigger picture may be that deposits are leaving the regulated banking system overall as customers realize they can earn higher yields outside checking and saving accounts.

Another key question will be whether JPMorgan and others are tightening lending standards ahead of an expected U.S. recession, which could constrict economic growth this year by making it harder for consumers and businesses to borrow money.

Banks have begun setting aside more loan loss provisions on expectations for a slowing economy later this year, and that could weigh on results. JPMorgan is expected to post a $2.27 billion provision for credit losses, according to the StreetAccount estimate.

Wall Street may provide little help this quarter, with investment banking fees likely to remain subdued thanks to the still-shut IPO market. CFO Jeremy Barnum said in February that investment banking revenue was headed for a 20% decline from a year earlier, and that trading was trending “a little bit worse” as well.

Finally, analysts will want to hear what Dimon has to say about the economy and his expectations for how the regional banking crisis will develop. JPMorgan has played a central role in propping up a client bank, First Republic, which teetered last month, in part by leading efforts to inject it with $30 billion in deposits.

Shares of JPMorgan are down about 4% this year, outperforming the 31% decline of the KBW Bank Index.

Wells Fargo and Citigroup are scheduled to release results later Friday, while Goldman Sachs and Bank of America report Tuesday and Morgan Stanley discloses results Wednesday.

This story is developing. Please check back for updates.