Investors breathing a sigh of relief after J.P. Morgan reports Q1 report

U.S. corporate earnings season kicked off Tuesday morning as global bank behemoth J.P. Morgan (NYSE: JPM) reported Q1 results which had some encouraging takeaways.

Profit down 69%

J.P. Morgan said it earned 78 cents per share in the first quarter on a slight year-over-year revenue decline of 3% at $29.07 billion. By comparison, analysts were modeling the big bank to earn $1.84 per share on revenue of $29.67 billion. Total profit was down 69% from last year to $2.9 billion, mostly due to an additional $6.8 billion in loan loss provisions which brought its provision for credit losses at $8.3 billion.

On the other hand, trading revenue hit a record high as Markets revenue soared 32% year-over-year to $7.2 billion. Fixed income trading revenue was up 34% to $5 billion due to strong client activity in Rates and Currencies. Equity trading revenue was up 28% to $2.2 billion, mostly due to higher revenue in derivatives.

Other key takeaways from the report include a 6% increase in book value per share to $75.88 while tangible book value per share rose 5% to $60.71.

During the quarter, J.P. Morgan allocated $6 billion towards net repurchases of its stock and paid investors a dividend of 90 cents per share. The share buyback program was suspended through the second quarter and the company said on April 6 it would consider a suspension in dividend payments in the future.

Shares of J.P. Morgan was trading higher by around 2% after Tuesday morning’s earnings release.

CEO Dimon comments on results

Commenting on J.P. Morgan’s results, CEO Jamie Dimon said the company entered the coronavirus crisis in a “position of strength” and it remains well capitalized with ample liquidity. The bank is backed by a CET1 ratio of 11.5% and total liquidity resources of more than $1 trillion.

However, the CEO also noted its $6.8 billion in new loan loss provisions is a necessary move given the “likelihood of a fairly severe recession.”

Widely considered by many as the top bank CEO in the world, Dimon underwent emergency heart surgery in March. He has since recovered and has been working remotely but the topic of CEO succession adds another question mark in an otherwise difficult environment.

Dimon has yet to publicly comment on his outlook for the bank for the rest of the year. Investors will be particularly interested to hear his thoughts on what impact low interest rates will have on earnings.