JPMorgan Earnings: Bumper Profits Driven by Strong Net Interest Income and Trading Revenue

Wide-moat-rated JPMorgan Chase earned bumper profits in the first quarter even as it was adversely affected by an FDIC special assessment charge of $0.725 billion for uninsured deposits of certain failed banks during the banking turmoil of the previous year. Excluding the nonrecurring FDIC special assessment charge, the bank reported earnings per share of $4.63, an increase of 13% year over year. The strong results were driven by solid net interest income and higher principal transaction (trading) revenue. The first-quarter numbers, after adjusting for the FDIC charge, resulted in a return on tangible equity of 22%, substantially higher than management’s midcycle ROTE target of 17%.