JP Morgan - Interest Income king

Stock prices rallied post results and continued to show uptrend momentum.

This set of results makes the world forget about the banking crisis that happened earlier this year.

So what are the key takeaways from JPM's earnings?

Net income was USD 14.5 billion, up by 67% inclusive of First Republic.

Higher net income was mainly contributed by net interest income, which was USD 21.9 billion, up 44% inclusive of First Republic.

Credit costs, which is the total of net charge-offs and reserve build, increased from USD 1.1 billion in Q2'22 to USD 2.9 billion in Q2'23.

Net charge-offs were higher, predominantly driven by Card Services, as 30+ days delinquencies returned to pre-pandemic levels.

Taking over First Republic comes with its caveats. Yes, results are better, but it affects the balance sheet to some extent.

Risk-weighted assets (RWA) pushed down the CET1 ratio by -53 bps, netting off the higher net income contribution.

However, CET 1 remained the same at 13.8% for standardized and 13.9% for advanced.

Tangible book value per share increased from USD 76.69 to USD 79.90.

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