JPMorgan profits and revenue surged in the first quarter

Banking giant JPMorgan Chase (JPM) said first quarter net income and revenue rose from a year ago while its deposits fell, demonstrating the resiliency of the nation’s largest lender as well as the challenges that tested its entire industry in March.

JPMorgan earnings of $12.6 billion were up 52% from the first quarter of 2022. Revenue of $38.3 billion was up 25% from the year-ago period.

JPMorgan kicks off a closely-watched earnings season for the nation’s biggest banks. Citigroup (C), Wells Fargo (WFC) and PNC (PNC) also report results today.

Banks of all sizes will be scrambling over the coming weeks to show investors how they are better positioned than rivals to weather any future turmoil.

JPMorgan shares were up 5.7% in the pre-market following Friday’s earnings release.

JPMorgan wasn’t totally immune from the chaos surrounding the failures of Silicon Valley Bank and Signature Bank. Its deposits fell 7% from a year ago but were up 1.5% from the fourth quarter of 2022.

Even before the turmoil in March, lenders big and small had been losing depositors to money market funds that were willing to offer higher yields as the Federal Reserve boosted interest rates. The outflow of deposits from all of the nation’s banks reached nearly $500 billion last month through March 29, according to recent Fed data.

JPMorgan, because of its size and diversity of its businesses, is better positioned than smaller rivals to weather such periods of uncertainty. Regulators also require it to maintain greater buffers to absorb losses and demonstrate that it has enough liquidity to withstand unexpected economic turmoil.

Its net interest income was up 48% compared to the year-ago quarter because the bank was able to charge more for loans as interest rates rose, and it raised its net interest income expectation for all of 2023 to $81 billion. Total loans were also up roughly 5% from a year ago, although down slightly from the fourth quarter.

Investors are looking for any signs that banks are making fewer new loans, which would affect the larger economy by reducing the flow of credit to businesses and consumers. Lending across the industry fell by nearly $105 billion during the two weeks ending March 29, according to the Fed, due mostly to a pullback by smaller institutions.

One lending business has clearly slowed at JPMorgan: mortgages. There is not as much demand for new borrowings now that interest rates are much higher than they were a year ago. Home Lending revenue was $720 million, down 38%.

JPMorgan is preparing for the possibility that credit conditions worsen. It increased its provision for credit losses by 56% compared to a year ago, a sign that it expects more debt to go bad as the economy slows.

JPMorgan CEO Jamie Dimon said in a release that “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. 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.”

The recent banking turmoil triggered by the March failures of Silicon Valley Bank and Signature Bank, he said, “is distinct” from the 2008 financial crisis “as it has involved far fewer financial players and fewer issues that need to be resolved, but financial conditions will likely tighten as lenders become more conservative, and we do not know if this will slow consumer spending.”

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