Shares of JPMorgan Chase (JPM) rose 4% on Friday, outperforming the broader market. The increase followed the release of the bank’s earnings, which surpassed analyst expectations. While past performance is not the primary concern, investors are particularly interested in the bank’s future outlook amid the government’s tariffs and the potential for a trade war.
The management of JPMorgan revised its annual forecast for net interest income upward and reported strong capital ratios, reassuring investors following the recent market correction.
In the first quarter, JPMorgan’s net managed revenue increased by 8% year-over-year to $46.0 billion. The adjusted (non-GAAP) earnings per share, accounting for one-time costs, reached $4.91, exceeding expectations by $0.27. The company also reported a robust 21% return on tangible equity and strengthened its balance sheet with a 15.4% Common Equity Tier 1 (CET1) ratio. Furthermore, the bank revised its 2025 net interest income outlook to $94.5 billion, an increase of $500 million from the previous quarter.
These achievements were in spite of an increase in provisions for loan losses to $3.3 billion, up from $1.9 billion the previous year. This increase is potentially linked to the volatility associated with tariffs, which have heightened the probability of a recession later this year to approximately 50%, as stated by the bank.
Despite market fluctuations, trading revenues grew significantly by 21%, surpassing initially anticipated low-double-digit growth. The investment banking division showed improvement through increased debt issuance, resulting in a 12% rise in investment banking fees. The wealth management segment also added an additional $90 billion in assets in the first quarter, despite the market downturn.
Chairman and CEO Jamie Dimon emphasized the resilience of JPMorgan’s balance sheet, which could help the bank navigate economic challenges and seize opportunities in the coming year. Dimon remarked on the importance of maintaining excess capital and liquidity, noting the CET1 ratio of 15.4% and $1.5 trillion in cash and marketable securities. He conveyed the bank’s preparedness for various scenarios, despite hoping for positive outcomes.
JPMorgan’s stock is trading at roughly 12 times earnings, which is considered relatively inexpensive. Nevertheless, risks of a recession or stagflation persist due to ongoing tariffs and trade disputes. While economic instability could impact bank stocks, JPMorgan appears to be a secure investment for both buying and holding.
JPMorgan Chase is an advertising partner of Motley Fool Money. Writer Billy Duberstein and/or his clients hold no positions in the stocks mentioned. The Motley Fool holds positions in and recommends JPMorgan Chase. A disclosure policy is in place at The Motley Fool.
