JPMorgan’s stock (NYSE: JPM) has gained 9% YTD, as compared to the 16% rise in the S&P500 over the same period. Further, the stock is currently trading at $145 per share, which is 9% below its fair value of $159 – Trefis’ estimate for JPMorgan’s valuation. The bank outperformed the consensus estimates in the first quarter of FY 2023. It reported net revenues of $38.3 billion – up 25% y-o-y. In terms of segments, consumer & community banking (CCB) rose by 35% y-o-y, followed by an 11% growth in asset & wealth management, and a 46% jump in commercial banking (CB). The top line mainly benefited from a 49% increase in the net interest income (NII) due to improvement in the interest rate environment and loan growth. On the flip side, the provisions for credit losses witnessed an unfavorable increase in the quarter from $1.46 billion to $2.28 billion. However, the negative impact was offset by a drop in noninterest expenses as a % of revenues. Overall, the net income increased 52% y-o-y to $12.62 billion.
The bank posted total revenues of $128.7 billion in FY 2022 – up 6% y-o-y. It was mainly due to a 28% y-o-y increase in the NII, partially offset by an 11% drop in the noninterest revenues. The NII benefited from interest rate hikes and growth in outstanding loan balances. On the expense front, the provisions figure significantly increased in the year, more than offsetting the positive impact of revenue growth. It led to a 23% y-o-y decline in the adjusted net income to $35.9 billion.
Moving forward, we expect the growth in NII to drive the Q2 results as well. Notably, the consensus estimates for Q2 revenues and earnings are $38.92 billion and $3.95 respectively. Overall, we estimate JPMorgan’s revenues to touch $145.5 billion in FY2023. Additionally, JPM’s adjusted net income margin is likely to remain around the same level as the previous year, resulting in an adjusted net income of $40.6 billion and an annual EPS of $13.97. This coupled with a P/E multiple of just above 11x will lead to a valuation of $159.
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|S&P 500 Return||0%||16%||99%|
|Trefis Multi-Strategy Portfolio||0%||19%||273%|
 Month-to-date and year-to-date as of 7/3/2023
 Cumulative total returns since the end of 2016