Q1 2014 Earnings Call Transcript

Transcript Call Date 04/11/2014

Operator: Please standby, we are about to begin. Good morning, ladies and gentlemen. Welcome to JPMorgan Chase's First Quarter 2014 Earnings Call. This call is being recorded. Your line will be muted for the duration of the call. We will now go live to the presentation. Please standby.

At this time, I would like to turn the call over to JPMorgan Chase's Chairman and CEO, Jamie Dimon; and Chief Financial Officer, Marianne Lake. Ms. Lake, please go ahead.

Marianne Lake - CFO: Thank you, operator. Good morning, everybody. As ever I'm going to take you through the earnings presentation, which is available on our website. Please refer to the disclaimer regarding forward-looking statements, which is at the back of the presentation.

So starting on Page 1, the Firm generated net income of $5.3 billion for the first quarter, $1.28 a share with a return on tangible common equity of 13% on revenue of $24 billion, down 8% year-on-year driven by lower markets revenue down 17% and continued headwinds in mortgage.

Reported expenses for the Firm were basically the same as adjusted expenses this quarter at $14.6 billion, in line with our expectations and our guidance for full year adjusted expenses to be below $59 billion. Firm-wide legal expense for the quarter was immaterial.

Of note, you will see that we didn't disclose any significant items this quarter on the front page of the presentation. There were items in the quarter that we consider non-core or non-recurring, each individually didn't rise to the level of being disclosed on the front page, and importantly, the net of all such items across businesses was not significant to the Firm's reported results.

To be clear, this means that our reported net income of $5.3 billion is very close to being a core performance number, which we consider a solid result given the challenging environment for those markets and mortgage. Importantly, underlying drivers across most businesses continued along impressive trends.

Finally, we are pleased that our capital plan was approved in the quarter and the Board announced its intention to increase our quarterly common stock dividend to $0.40 a share effective in the second quarter, as well as the authorization to repurchase a gross $6.5 billion of common equity or net a little over $5 billion, that's net of expected employee issuance.

So skipping over Page 2 and turning to Page 3. Our Basel III Tier 1 common ratio was 9.5% flat to last quarter. The over 40 basis points of capital generated and run-off in the quarter, largely offset by the impact of certain specific risk models that were approved to use in Basel I last year, but which our regulators disapproved for use under Basel III effective at the beginning of this year.

We believe this should largely be timing with past remediation in the second half of 2014 and further remediation in 2015. The impact of these model's approvals was contemplated in our Investor Day guidance of reaching 10% plus by the year end, but it won't be in a linear fashion and the majority of capital accretion will occur in the second half of the year.

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