JPMorgan (NYSE:JPM) rose 4.69% on Friday, April 12 after reporting a solid quarter. With the P/E at ~12.5 times, the company may continue to offer upside surprises for shareholders.
JPMorgan reported earnings of $2.65 a share. Both the corporate/investment and consumer/community units performed admirably. Consumer loans rose 4% while client assets rose a solid 13% to $312 billion.
JPM has a rock-solid balance sheet. Its CET1 capital is $186 billion. And shareholders reaped the rewards with the $7.4 billion in distributions. This includes $4.7 billion in net repurchases. The current dividend of $0.80 could see a hike some time this year if the bank’s pace of growth continues.
Outlook
JPMorgan forecast net interest income of $58B+ this year. Expenses will come in below $66 billion. Net charge-offs will be below $5.5 billion.
The benign interest outlook – no Fed rate hikes for the rest of 2019 – is not hindering JPM stock. Management expects deposits to stabilize, while the 3% costs for technology investments will pay off over the long-term. As rate hikes resume beyond 2019, JPM stands to outperform the other banks.
Takeaway
Strong non-recurring revenue growth, albeit small, is meaningful over the long-term. Deploying cash to short-term investments higher than IOER will also give the bank low-risk returns that will add favorably to results.
