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Stock Analyst Update

Fee Income Continues Strong Growth for JPMorgan

We are increasing our fair value estimate for the wide-moat bank after an excellent first quarter.


Wide-moat JPMorgan (JPM) reported excellent first-quarter earnings, blowing out the FactSet consensus estimate of $2.77 per share with reported EPS of $4.50. This equates to a return on tangible common equity of 29%. The biggest swing factor for the outperformance was the firm's provisioning for credit losses. As we had expected, the bank released a sizable portion of reserves, totaling $5.2 billion. While we had been more bullish than consensus on reserve releases, first-quarter results were even ahead of our own projections. We had expected just under $5 billion in releases for the full year, but the bank released more than $5 billion already during the first quarter of 2021. Going forward, we had expected roughly $3.5 billion in reserve releases from JPMorgan in 2022, but given the accelerated timeline already playing out, some of these releases could be pushed into the current year. Adjusted results, which exclude the reserve releases, had EPS at $3.31 with a ROTCE of 21%. Overall, while the current results largely fit within our existing projections, we are increasing our fair value estimate slightly to $140 per share from $136.

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Eric Compton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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