On the day that the Federal Reserve and FDIC announced that JPMorgan Chase was one of five systemically important financial institutions whose resolution plans were “not credible,” JPMorgan Chase announced that the bank’s first quarter profits for 2016 were down over-the-year by 7 percent.
JPMorgan Chase’s net income for Q1 was $5.5 billion, compared with $5.9 billion in the same quarter for 2015. The bank’s net revenue for Q1 of $24.1 billion represented a 3 percent decline over-the-year, and non-interest revenue declined by $1.5 billion down to $12.4 billion. According to JPMorgan Chase, lower Fixed Income Markets revenue and Investment Banking fees are what drove the decline in non-interest revenue.
Despite the declines in net income and net revenue, JPMorgan Chase’s Mortgage Banking net revenue increased by 7 percent up to $1.9 billion in Q1. The increase was driven by higher mortgage servicing rights (MSR) risk management) results and strong loan growth, partially offset by lower servicing revenue, according to JPMorgan Chase.
Despite the declines, the CEO Jamie Dimon was pleased with the Q1 results. In spite of the over-the-year decline, net income was up over-the-quarter by 1.5 percent.
“We delivered solid results this quarter with strong underlying drivers,” Dimon said. “The consumer businesses continue to grow loans and deposits impressively, attracting deposits faster than the industry. The U.S. consumer remains healthy and consumer credit trends are favorable. While challenging markets impacted the industry, we maintained our leadership positions and market share in the Corporate & Investment Bank and Asset Management, reflecting the strength of our platform. Even in a challenging environment, clients continue to turn to us in the global markets and we saw positive net long-term asset flows in Asset Management.”
Dimon announced last week in his annual letter to shareholders that JPMorgan Chase was so well-capitalized that it could absorb theoretical losses for all 31 banks that participate in the Fed’s annual stress test.
On Wednesday, JPMorgan Chase, along with Bank of America, Bank of New York Mellon, State Street, and Wells Fargo, were identified by the Fed and the FDIC as having deficient 2015 resolution plans, or “living wills.” The agencies jointly determined that the resolutions plans of these firms were “not credible or would not facilitate an orderly resolution under the U.S. Bankruptcy Code, the statutory standard established in the Dodd-Frank Wall Street Reform and Consumer Protection Act.”
Click here to view a presentation on JPMorgan Chase’s Q1 earnings.