JPMorgan Chase reported a net income of $8.6bn in Q2 2022, 28% lower YoY from $11.9bn a year earlier. The main driver behind the muted earnings performance was increased provisions for credit losses at $1.1bn. This included $657mn of net charge-offs and a net credit reserve build of $428mn vs. a net release of $3bn in the previous year. The bank’s revenues stood at $31.6bn, up 1% YoY. Markets revenue was up 15% at $7.8bn, with fixed income and equities both increasing by 15%, contributing $4.7bn and $3.1bn respectively. This was primarily a result of a strong performance in derivatives. Over the course of Q2, capital was also distributed to shareholders in the form of $3bn in dividends and $224mn of share buybacks. CNBC notes that this is a reflection of Chairman and CEO Jamie Dimon’s increasingly cautious outlook on the global economy. In light of that, Dimon said that the bank has “temporarily suspended share buybacks” so that it can meet regulatory capital requirements. JP Morgan’s CET1 ratio stood at 12.2% during the quarter, down 80bp YoY. This ratio currently stands below the new 13.3% CET1 requirement beginning October 1, 2022.
JPMorgan’s 6.1% Perps callable in 2024 were up 0.92 points to trade at 96, yielding 8.11%.
Morgan Stanley reported a net income of $2.5bn, down 29% YoY from $3.5bn a year ago. Provisions for credit losses stood at $101mn in Q2 2022 vs $73mn in Q2 2021. Revenues also fell to $13.1bn, down 11% YoY. Investment banking revenues were the primary reason for the muted results, standing at $1.1bn, down 55% compared to the prior year, due to lower M&A transactions and overall issuances given the uncertain market conditions. Equity and fixed income net revenues increased 5% and 49% respectively, producing $2.96bn and $2.8bn, as clients sought to reposition themselves following escalating volatility. Its flagship Wealth Management unit reported net revenues of $5.7bn, down 6% YoY. The bank also reported an additional $413mn loss caused by mark-to-market losses on corporate loans held for sale amid widening credit spreads. The investment bank repurchased $2.7bn of common stock in Q2 and further announced a multi-year repurchase plan of $20bn of outstanding shares. It also declared a $0.775 quarterly dividend per share, 11% higher than its current dividends. Morgan Stanley’s CET1 ratio stood at 15.2%, down 150bp YoY. Their current ratio is 190bp points above the new CET1 requirement that will come into play on October 1, 2022.
Morgan Stanley’s 5.875% Perps are trading at 100.2, up by 0.2 points, yielding 5.81%.