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JPMorganChase& Company (JPM Free JPMorgan Stock Report), the largest bank in the United States and a Dow-30 component, has released its March-quarter financial results. The company earned $2.65 a share in the period, which was better than our estimate of $2.30, and exceeded the year-earlier tally of $2.37 and consensus estimates. Revenues advanced 5% year over year, mostly driven by an 8% increase in net interest income, which benefited from interest-rate hikes in the past year, balance sheet growth, and a more favorable asset mix. Lower performance-based compensation (reflecting weak markets revenues) and the absence of a FDIC surcharge logged in the prior year, helped contain expense growth to 2%, despite considerable spending on technology and improvements to the customer experience. JPMorgan added $135 million to its reserves for certain downgraded commercial loans. Note that earnings would have fallen slightly short of year-earlier results if it wasn't for a more than $600 million positive swing in Corporate profits, partly due to the absence of prior-year losses on investment securities. Still, the company turned in a fairly decent performance despite less favorable market conditions than in the year-earlier term, and investors bid the stock up more than 4% in Friday morning trading.

By business segment, Consumer & Community Banking profits advanced a strong 19% on a 9% revenue increase. Higher net interest income, credit card revenues, and auto lease income offset lower mortgage servicing revenues. The Corporate & Investment Bank segment's performance was mixed. The division's revenues and profits fell 6% and 18%, respectively, compared to its year-earlier showing, but improved on a sequential-period basis. Compared to the prior year, investment banking revenues rose 10% but were more than offset by lower fixed-income and equities markets revenues. Sharp swings in markets revenues occasionally contribute some lumpiness to JPMorgan's results. Profits in JPMorgan's smaller Asset & Wealth Management unit also declined year to year, hurt by lower average market levels, and lower brokerage activity. But Commercial Banking profits ticked up 3%, driven by a large number of investment banking transactions and wider deposit margins.

The company entered 2019 with good momentum across most of its businesses, but faces some challenges in the year ahead, including possible further pressure to raise deposit interest rates. Nonetheless, management looks for net interest revenues to advance 5%, expenses to increase less than 4%, and loan losses to remain moderate. Given the favorable start to the year, we are raising our share-net call for 2019, from $9.40 to $9.90, and are introducing a 2020 earnings estimate of $10.40.

JPMorgan's future prospects look bright. The company should continue to benefit from its strong market shares of the credit card and investment banking businesses. And it sees opportunities to grow, including selling mortgages to customers with other products and expanding in new geographic markets, where it plans to open 90 branches this year. The stock offers an attractive dividend yield of over 3%, and it has decent risk-adjusted total return potential to 2022-2024.

About The CompanyJPMorgan Chase & Co. is a global financial services firm with assets of $2.7 trillion and operations worldwide. The company is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, and asset management. The company had previously merged with Washington Mutual in September, 2008, Bank One in July, 2004, and Chase Manhattan in the final month of 2000.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.