JPMorgan Chase draws 148 advisors as earnings soar in bank crisis

JPMorgan Chase draws 148 advisors as earnings soar amid banking crisis

April 14, 2023 3:00 PM

America's biggest bank continued to attract financial advisors in the first quarter of 2023, adding steam to its growing ambitions in wealth management amid a banking crisis that unfolded last month.

JPMorgan Chase reported record first-quarter revenue on Friday, along with a net headcount gain of 148 advisors across its lines of business. The banking crisis allowed some big banks to appeal more to advisors — who were expected to migrate to firms perceived as more stable, in contrast to stumbling smaller institutions like First Republic.

The total number of financial advisors across the bank's wealth management lines rose to 8,314 — a bump of 2% from 8,166 last quarter, and 9% from 7,614 year over year.

Firmwide, profits of $12.6 billion popped 52% year over year and 15% over last quarter's $11.0 billion. Reported revenue was $38.3 billion, up 25% over the past year and 11% over the past quarter's $34.5 billion.

The company beat expectations with earnings per share of $4.10, which was 20% more than the analyst consensus of $3.41. The stock was up 7% as of around midday on Friday.

"Our years of investment and innovation, vigilant risk and controls framework, and fortress balance sheet allowed us to produce these returns, and also act as a pillar of strength in the banking system and stand by our clients during a period of heightened volatility," Jamie Dimon, the Chairman and CEO of JPMorgan Chase said in a statement Friday.

Average deposits were down 3% from the past quarter, reflecting a widespread cash flight in recent months as clients ditched bank accounts that paid little for higher-yielding accounts elsewhere. But total deposits grew 2% over the past quarter to $2.38 trillion. The bank attributed the rise to last month's banking crisis, which saw many consumers frantically pull funds out of regional and community banks and put them into the largest banks.

"As you would expect, we saw significant new account opening activity and meaningful deposit and money market fund inflows, most significantly in the commercial bank, Business Banking and AWS (Asset & Wealth Management)," Jeremy Barnum, the bank's chief financial officer, said in an earnings call Friday.

"We estimate that we have retained approximately $50 billion of these deposit inflows at quarter end," he said. But some of the surprise deposit inflows could leave again in "modest" amounts, Barnum said, as consumers reassess their options again.

"It's a competitive market and it's entirely possible that people temporarily come to us and then over time decide to go elsewhere," Barnum said.

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To see the main takeaways from JPMorgan Chase's first-quarter earnings, scroll down the slideshow. For coverage of the firm's fourth-quarter earnings, click here. For a look at the results from the third quarter, click here.

Note: The firm doesn't break out some specific wealth management metrics across its organization, which includes the Global Private Bank in its Asset & Wealth Management division and J.P. Morgan Wealth Management, which is part of the Banking & Wealth Management unit.

Wealth management financials

Banking & Wealth Management's parent unit, Consumer and Community Banking, reported net income of $5.24 billion — a spike of 80% year over year from $2.91 billion, and 15% up from last quarter's $4.56 billion, according to the press release.

The BWM unit's revenue was $10.04 billion, up 67% year over year from $6.02 billion, driven by higher deposit margins. It rose 5% from $9.58 billion in the previous quarter.

Private bank financials

The AWM business, which includes the Private Bank, also had strong earnings. Net income for AWM was $1.37 billion, up 36% over the past year and 21% over the previous quarter.

Revenue of $4.78 billion was up 4% over the prior quarter's $4.59 and 11% year over year from $4.32 billion for AWM. The private bank had revenue of $2.35 billion, down 3% from the past quarter but still up 17% year over year.

"Asset & Wealth Management performed well with strong long-term inflows of $47 billion across products," the bank said in the press release.

Wealth management advisors

Financial advisor headcount in the Banking & Wealth Management business rose to 5,125 in the first quarter, up 2% from last quarter's 5,029. The headcount was also up 6% from 4,816 year over year, according to the earnings supplement.

In May 2022, JPMorgan shared plans to recruit 1,300 more advisors in the next three years to bring the total advisor count in this part of the business to 6,000.

Client assets

In total, the firm ended the first quarter with $2.59 trillion in client assets across all its wealth units, including client investment assets in BWM's J.P. Morgan Wealth Management and AWM's Private Bank — up 6% from $2.44 trillion in the last quarter and 9% from $2.39 trillion year over year.

The BWM business reported $690.8 billion of client investment assets, up 7% from $647.1 billion in the prior quarter but down 1% year over year.

The private bank had $2.09 trillion of total client assets, up 6% from $1.96 trillion the past quarter and up 11% from $1.88 trillion a year ago. Of these, $826 billion were client assets under management — 10% up from last quarter's $751 billion.

The Private Bank's parent unit AWM, which also includes Global Institutional and Global Funds, reported $3.01 trillion of total AUM, up 9% from $2.77 trillion last quarter and up 2% year over year from $2.96 trillion in the first quarter of 2022.

Remark

The bank said a major challenge for the industry going forward would be the likelihood of increased interest rates — hikes that triggered the events of the banking crisis, precipitating Silicon Valley Bank's liquidity crunch and failure last month.

"People need to be prepared. They shouldn't pray that they don't go up. They should prepare for them going up," Dimon said on the earnings call.

Dimon said he did not believe that raising capital requirements across the board was necessarily the right move for regulators following last month's bank collapses. "If you believe it's a good thing for the system, raise the capital [requirements], more credit will go out of the system [to nonbanks]… They want that, that's fine. They should do it with a forethought, not accidentally."

In response to Wells Fargo analyst Mike Mayo expressing concern that the bank would overextend itself to "rescue problem banks" that didn't manage their risks as well, Dimon said JPMC had the resources to spare, and that teaming with other banks to help ailing banks like First Republic last month had been "the right thing" to do.