JPM Non-GAAP Revenues Beat, Earnings Rise On Reduced Legal Charges

Following countless quarters in which JPM suffered about $30 billion in legal charges, the tempets in Jamie Dimon's legal settlement teapot may be quieting down, with a quarter in which JPM experienced "only" $687 million in pre-tax legal expenses, or about $0.13 in EPS.

As a result of this reduced kickback to the government to continue operating, JPM managed to beat expectations on both the top and bottom line, printing revenues and EPS of $24.8 billion amd $1.45 respectively, fractionally higher than the $24.5 Bn and $1.41 expected.

 

Actually, half of that was accurate: JPM's GAAP revenue of $24.1 billion missed expectations, however its "managed basis" non-GAAP revenue did beat.

 

So where did JPM derive its Q1 growth, GAAP, non-GAAP or otherwise?

Well, the core business of consumer and community banking reported Net Revenue of $10.7 billion, down from Q4, but barely up from a year ago, which as a result of expense cuts led to a $238MM increase in Net Income to $2.2 billion.

 

How did JPM grow Net Income here? Simple: it fired some folks:


  • Total headcount down ~1,900 YTD
  • Reduced expense by $247mm or 4% YoY – overhead ratio of 58%

Within this group, it is notable that Mortgage Banking still continues to generate some revenue and profit for JPM, or $1.7 billion and $326 million, evven as the group is largely being mothballed. Curiously, JPM did report a 45% increase in mortgage originations in Q1, a total of $24.7 billion. But once again it was the 13% Y/Y drop in expenses to $1.2 billion due to "lower headcount" which indicates what management thinks of this business line.

 

As for sales, trading and i-banking, it appears JPM has managed to succeed where Jefferies previously failed dramatically, and in Q1, generated $4.1 billion in fixed income revenues, up $176mm from a year ago, and with equity markets contributing $1.6 billion, this meants a $2.5 billion in Sales and Trading net inome, up $412 mm from a year ago.


More from JPM:

Markets revenue of $5.7B, up 9% YoY; ex-business simplification, up 20%4, primarily driven by:


  • Fixed Income Markets of $4.1B, up 5% YoY; ex-business simplification, up 20%4, primarily driven by higher revenues in Currencies & Emerging Markets and Rates
  • Equity Markets of $1.6B, up 22% YoY, showing strength across derivatives and cash


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