These are my takeaways.
JPM Q2 earnings were solid. Higher than Q1 across the board except for 400 MM add to reserves and a higher tax rate (20.4% vs 17.7 in Q1). Charge-off were actually slightly lower than Q1. In fact, except for lower Investment Banking and Mortgage fees, all of their other categories were near record levels. In fact expenses were quite contained given the inflationary environment.
CFO raised NII $2 BB (in spite of yield curve flattening), kept expenses flat, and indicated no near issues with credit. All flat too improved from previous update. ROTCE hit 17% earlier then planned.
Dimon was very animated on call. Only negative was deferral in shareholder buybacks. Seems related to 2 issues. Balance sheet market to market of $14 BB so far from rising rates. Will come back to equity $3 BB per year if rates stay flat. New risk rates for balance sheet items. Primarily mortgages. New requirement for mortgages unreasonable to Dimon. Plans to sell most of the mortgages to reduce issue. Indicated this new rule is terrible for America. No big deal for JPM. Characterized the stress test as not representative of what would happen in a real stress situation. Dimon indicated JPM runs thousands of stress test a week far more sophisticated than FEDS. FED stress test indicated $40 BB of losses. Dimon says it will never happen even under their scenario. Proof is 2008 - 2010. Dimon claims under their stress scenario JMP would still be profitable.
CFO demonstrated that capital levels will replenish very quickly via retained earnings.
CFO asked on call if any creep in credit deterioration, he said would have to look close and maybe? in lower income group? Maybe? Could simply be return to normalization.
Loan growth YTD up 6% deposit growth up 7%.
Dimon discussed hypothetical impacts of severe credit scenarios. He did not predict one. Media only focussed on negative scenarios comments. They never reviewed the financials. Which were solid. Credit continues to perform at remarkably low levels.
Pre-tax pre-provision was within $1 BB of all time highest quarter in Q2 2021.