Jeremy Barnum
Chief Financial Officer at JPMorgan Chase & Co.
Thank you, and good morning, everyone. The presentation is available on our website and please refer to the disclaimer in the back. Starting on Page 1, the firm reported net income of $9.3 billion, EPS of $3.04 on revenue of $39.9 billion and delivered an ROTCE of 15%. These results included the $2.9 billion FDIC special assessment and $743 million of net investment securities losses in corporate. On Page 2, we have more on our fourth quarter results.
Similar to prior quarters, we have called out the impact of First Republic where relevant. You'll also note that we have now allocated certain deposits, which were previously in CCB to the appropriate lines of business. For the quarter, First Republic contributed $1.9 billion of revenue, $890 million of expense and $647 million of net income.
Now, focusing on the firmwide fourth quarter results excluding virtual public, revenue of $38.1 billion was up $2.5 billion or 7% year-on year. NII ex-markets was up $2.2 billion or 11%, predominantly driven by higher rates. An IR ex-markets was up $139 million or 1%, and markets revenue was up $141 million or 2%. Expenses of $23.6 billion were up $4.6 billion or 24% year-on-year, predominantly driven by the FDIC special assessment and higher compensation, including wage inflation and growth in front-office and technology. And credit costs were $2.6 billion, reflecting net charge-offs of $2.2 billion and net reserve build $474 million.
Net charge-offs were up $1.3 billion, predominantly driven by card and single-name exposures in wholesale, which were largely previously reserved. The net reserve build was primarily driven by loan growth in card and the deterioration in the outlook related to commercial real estate valuations in the commercial bank.
Looking at the full-year results on Page 3. The firm reported net income of $50 billion, EPS of $16.23 and revenue of $162 billion. And we delivered an ROTCE of 21%.
On the balance sheet and capital on Page 4. We ended the quarter with a CET1 ratio of 15%, up 70 basis points versus the prior quarter, primarily driven by net income OCI gains and lower RWA, partially offset by a continued modest pace of capital distributions, as the firm builds towards the proposed Basel III Endgame requirements. Now let's go to our businesses, starting with CCB on Page 5. Total debt in credit card spend was up 7% year-on-year, driven by strong account growth and consumer spend remains stable.
Turning now to our financial results excluding First Republic. CCB reported net income of $4.4 billion on revenue of $17 billion, which was up 8% year-on-year. In Banking and Wealth Management, revenue was up 6% year-on-year, reflecting higher NII on higher rates, largely offset by lower deposits with average balances down 8% year-on-year. Client investment assets were up 25%, driven by market performance and strong net inflows. In fact, it's been a record year for retail net-new money. In home lending, revenue was up $230 million, predominantly driven by the absence of an MSR loss this quarter versus the prior year and higher NII.
Moving to cards services and auto, revenue was up 8% year-on-year, driven by higher card services NII on higher revolving balances, partially offset by lower auto releasing term. Card outstandings were up 14% due to strong account acquisition and continued normalization of revolve. And then auto originations were $9.9 billion, up 32% as we gained market share while retaining strong margins. Expenses of $8.7 billion were up 10% year-on-year, largely driven by compensation, including an increase in employees, primarily in bankers, advisors and technology and wage inflation, as well as continued investments in marketing and technology.
In terms of credit performance this quarter, credit costs were $2.2 billion, largely driven by net charge-offs, which were up $791 million year-on-year, predominantly due to continued normalization in card. The net reserve build of $538 million reflected loan growth in card.
Next, the CIB on Page 6. The CIB reported net income of $2.5 billion on revenue of $11 billion. Investment banking revenue of $1.6 billion was up 13% year-on-year. IB fees were also up 13% year-on-year and we ended the year ranked number one with the wallet share of 8.9%. And advisory fees were up 2%. Underwriting fees were up significantly compared to a weak prior year quarter with debt up 21% and equity up 30%. We are starting the year with a healthy pipeline and we are encouraged by the level of capital markets activity, but announced M&A remains a headwind and the extent as well as the timing of capital markets normalization remains uncertain. Payments revenue was $2.3 billion, up 10% year-on-year. Excluding equity investments, it was flat as fee growth was predominantly offset by deposit-related client credits.
Moving to markets, total revenue was $5.8 billion, up 2% year-on-year. Fixed income was a record fourth quarter, up 8%. It was another strong quarter in our securitized products business, which was partially offset by lower revenue rates coming off a strong quarter last year. Equity markets was down 8%, driven by lower revenue in derivatives and cash. Security services revenue of $1.2 billion was up 3% year-on-year. Expenses of $6.8 billion were up 4% year-on-year, predominantly driven by the timing of revenue-related compensation. Credit costs were $210 million, reflecting net charge-offs of $121 million and a net reserve build of $89 million.
Moving to the commercial bank on Page 7. Commercial banking reported net income of $1.5 billion. Revenue of $3.7 billion was up 7% year-on-year, largely driven by higher NII, or the impact of rates was partially offset by lower deposit balances. Payments revenue of $2 billion was up 2% year-on-year, driven by fee growth, largely offset by deposit-related client credits. Gross investment banking and markets revenue of $924 million was up 32% year-on-year, primarily reflecting increased capital markets and M&A activity. Expenses of $1.4 billion were up 9% year-on-year, driven by an increase in employees including front-office and technology investments, as well as higher volume-related expense, including the impact of new client acquisition.
Average deposits were down 6% year-on-year primarily driven by lower non-operating deposits as clients continued to opt for higher-yielding alternatives and flat quarter-on-quarter as client balances are seasonally higher at year end. Loans were down 1% quarter-on-quarter. C&I loans were down 2%, reflecting lower revolver utilization and muted demand for new loans as clients remain cautious. And CRE loans were flat, as higher rate continue to have an impact on origination and payoff activity. Finally, credit costs were $269 million, including net charge-offs of $127 million and a net reserve build of $142 million, driven by deterioration in our commercial real estate valuation outlook.
And then to complete all lines of business, AWM on Page 8. Asset and Wealth Management reported net income of $925 million with pre-tax margin of 28%. Revenue of $4.7 billion was up 2% year-on-year, driven by higher management fees on strong net inflows and higher average market levels, predominantly offset by lower NII. The decrease in NII reflects lower deposit margins and balances, partially offset by wider spreads on loans.
Expenses of $3.4 billion were up 11% year-on-year, largely driven by higher compensation, including performance-based incentives, continued growth in our private banking advisory teams, the impact of closing J.P. Morgan Asset Management China acquisition, and the continued investment in global shares. For the quarter, net long-term inflows were $12 billion, positive across equities and fixed-income and the $140 billion for the full-year.
In liquidity, we saw net inflows of $49 billion for the quarter and net inflows of $242 billion for the full-year. And we had record client asset net inflows of $489 billion for the year. AUM of $3.4 trillion and clients assets of $5 trillion were both up 24% year-on-year, driven by continued net inflows and higher market levels. And finally, loans were up 2% quarter-on-quarter and deposits were up 7% quarter-on-quarter.
Turning to Corporate on Page 9. Corporate reported a net loss of $689 million. Revenue of $1.8 billion was up $597 million year-on-year. NII of $2.5 billion was up $1.2 billion year-on-year due to the impact of higher rates and balance sheet mix. Our NIR was a net loss of $687 million compared with a net loss of $115 million and included the net investment securities losses I mentioned upfront. And expenses of $3.4 billion were up $3 billion year-on-year, predominantly driven by the FDIC special assessment.
With that let's pivot to the outlook for 2024, starting with NII on Page 10. We expect 2024 NII ex-markets to be approximately $88 billion. Going through the drivers, the outlook assumes that rates follow the forward curve, which currently includes six cuts this year. On deposits, we expect balances to be very modestly down from current levels, while lower rates should decrease repricing pressure, we remain asset-sensitive and therefore lower rates will decrease NII, resulting in more normal deposit margins.
We expect strong loan growth in card to continue, but not at the same pace as 2023. Still, this should help offset some of the impact of lower rates. Outside of the card, loan growth will likely remain muted. It's important to note that we just reported a quarterly NII ex-markets run rate of $94 billion, combining that with the full-year guidance of approximately $88 billion implies meaningful sequential quarterly declines throughout 2024, consistent with what we've been telling you for some time. And keep in mind, that many of the sources of uncertainty that we've highlighted previously surrounding the NII outlook remain. And on total NII, we expect it to be approximately $90 billion for the full-year, reflecting an increase in markets NII, which as always, you should think of as largely offset in NIR.
Now let's turn to expenses on Page 11. We expect 2024 adjusted expense to be about $90 billion. You'll see on the slide, we provided detail by line-of-business. Generally, you can see that both in dollar terms and in percentage terms the expense growth is aligned to where the greatest opportunities are both in terms of share and available returns. And of course, you'll hear more at Investor Day and between now and that.
On the right-hand side of the page, we've highlighted some firmwide drivers. Thematically, the biggest driver is what I might call business growth writ large. Within that, narrowly defined volume and revenue-related growth represents about $1 billion of the increase across the company as a result of an improved and NIR outlook compared to about $400 million in 2023. But in addition, the ongoing growth of the company which continues to produce share gains and additional profitability is coming with increased expense across a range of categories. The quantum of investment increase is comparable to last year's increase and is driven by all the same themes, bankers, branches, advisors, technology, as well as marketing. Net-net, First Republic produces a modest increase in expenses, but with a significantly lower 2024 exit run rate as a result of business integration efforts.
Finally, despite significantly lower inflation outlook in the economy as a whole, we still see some residual effects of inflation flowing through most of our expense categories. It's worth noting that both the general business growth and investment growth include decisions that have been executed, both in response to market conditions during 2023, and to support the future growth and profitability of the company. We've included the fourth quarter of 2023 exit rate on the page to illustrate that a significant portion of the year-on-year increase in expense is already in the run rate.
Now let's turn to Page 12 and cover credit and wrap up. On credit, we continue to expect the 2024 card net charge-off rate to be below 3.5% consistent with Investor Day guidance. So in closing, we shouldn't leave 2023 without noting what an upstanding year it was, producing record revenue and net income despite some notable significant items. We're very proud of what we accomplished this year and want to thank everyone who made it possible. At the same time, we emphasized throughout 2023 the extent to which we were over earning as indicated by an ROTCE yield as 4% above our through-the-cycle target.
As we turn to 2024, it shouldn't be surprising that our outlook has us beginning to march down the path towards normalization of our returns. But despite the expected dissipation of the 2023 tailwinds and the presence of significant economic and geopolitical uncertainties, we remain optimistic about this franchise' ability to produce superior returns through a broad range of environments and this management team remains laser-focused on executing for shareholders, clients and communities.
And with that, let's open the line for Q&A.
