JPMorgan Chase & Co. (NYSE: JPM) stock falls as first quarter performance is not as forecasted

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JPMorgan Chase & Co. (NYSE: JPM) stock lost over 3.2% on April 13th, 2018 as they are witnessing the impact of the new revenue recognition standard. They would have the full year impact of grossing up non-interest revenue and expense each by approximately $1.2 billion. The impact for the first quarter is over $300 million which is included. As a result of tax reform, certain tax equivalent adjustments that are included in managed revenue are lower on a relative basis and for that prior periods have not being restated.

A sign outside the headquarters of JP Morgan Chase & Co in New York, September 19, 2013. REUTERS/Mike Segar

For the first quarter of 2018, their revenue reached $28.5 billion which is a rise of $2.7 billion or 10% year-on-year. Net interest income reached $1.1 billion, on the back of higher rates. Non-interest revenue was up $1.6 billion year-on-year which comprises over $400 million of losses on investment securities and legacy private equity investments.

Their CET1 reached 11.8%, which is a fall of over 30 basis points against the last quarter. The Capital generated was offset by a net capital distributions and changes in AOCI. This fall was on the back of higher risk weighted assets reflecting the rising level of market activity. The group also distributed $6.7 billion of capital to shareholders and submitted their 2018 CCAR Capital Plan to the Federal Reserve.

As per Consumer & Community Banking segment performance, they generated $3.3 billion of net income and an ROE of 25%. Core loans rose 8% year-on-year, boosted by Home Lending which rose 13%, Business Banking up 7%, Card up 5%, and Auto loans and leases up 6%.

The Client investment assets rose 13% year-on-year with half of the growth from net new money flows and with record flows this quarter. Consumer & Business Banking revenue rose 17% on the back of a better NII, given the ongoing margin expansion and deposit growth.

The shares of JPM rallied over 32.2% in the last one year. Recently HSBC initiated a “Hold” rating on the stock with a $111 target.

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