Jeremy Barnum
Chief Financial Officer at JPMorgan Chase & Co.
Thanks, and good morning, everyone. The presentation is available on our website and please refer to the disclaimer on the back.
Starting on page one, the firm reported net income of $12.6 billion, EPS of $4.10 on revenue of $39.3 billion, and delivered an ROTCE of 23%. These results included $868 million of net investment securities losses in Corporate.
Before reviewing our results for the quarter, let's talk about the recent bank failures. Jamie has addressed a number of the important themes in a shareholder letter and a recent televised interview. So I will go straight to the specific impacts on the firm. 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 AWM.
Regarding the deposit inflows, at the firm-wide level, average deposits were down 3% quarter-on-quarter, while end-of-period deposits were up 2% quarter-on-quarter, implying an intra-quarter reversal of the recent outflow trend as a consequence of the March events. We estimate that we have retained approximately $50 billion of these deposit inflows at quarter-end.
It's important to note that while the sequential period-end deposit increase is higher than we would have otherwise expected, our current full-year NII outlook, which I will address at the end, still assumes modest deposit outflows from here. We expect these outflows to be driven by the same factors as last quarter as well as the expectation that we will not retain all of this quarter's inflows.
Now, back to the quarter, touching on a few highlights. We grew our IB fee wallet share. Consumer spending remains solid with combined debit and credit card spend up 10% year-on-year and credit continues to normalize, but actual performance remains strong across the company.
On page two, we have some more detail. Revenue of $39.3 billion was up $7.7 billion, or 25% year-on year. NII ex-Markets was up $9.2 billion or 78%, driven by higher rates, partially offset by lower deposit balances. NIR ex-Markets was down $1.1 billion or 10%, driven by the securities losses previously mentioned as well as lower IB fees and lower auto lease income on lower volume. And Markets revenue was down $371 million or 4% year-on-year.
Expenses of $20.1 billion were up $916 million or 5% year-on-year, driven by compensation-related costs, reflecting the annualization of last year's headcount growth and wage inflation. These results include the impact of the higher FDIC assessment I mentioned last quarter, which, of course, is unrelated to recent events. And credit costs of $2.3 billion included net charge-offs of $1.1 billion predominantly in card. The net reserve build of $1.1 billion was largely driven by deterioration in our weighted-average economic outlook.
On to balance sheet and capital on page three. We ended the quarter with a CET1 ratio of 13.8%, up about 60 basis points, which was primarily driven by the benefit of net income, less distributions and AOCI gains. And in line with what we previously said, we resumed stock buybacks this quarter and distributed a total of $1.9 billion in net repurchases back to shareholders.
Now let's go to our businesses starting with CCB on page four. Touching quickly on the health of US consumers and small businesses based on our data, both continue to show resilience and remain on the path to normalization as expected, but we continue to monitor their activity closely. Spend remains solid and we have not observed any notable pullback throughout the quarter.
Moving to financial results, CCB reported net income of $5.2 billion on revenue of $16.5 billion, which was up 35% year-on-year. In Banking & Wealth Management, revenue was up 67% year-on year, driven by higher NII on higher rates. Average deposits were down 2% quarter-on-quarter, in line with recent trends. Throughout the quarter, we continued to see customer flows to higher-yielding products, as you would expect, but we're encouraged by what we are capturing in CDs and our Wealth Management offerings.
Client investment assets were down 1% year-on year, but up 7% quarter-on-quarter, driven by market performance as well as strong net inflows. In Home Lending, revenue was down 38% year-on year, largely driven by lower net interest income from tighter loan spreads and lower production revenue.
Moving to Card Services & Auto, revenue was up 14% year-on-year, largely driven by higher Card Services NII on higher revolving balances, partially offset by lower auto lease income. Credit card spend was up 13% year-on-year. Card outstandings were up 21%, driven by strong new account growth and revolve normalization. And in auto, originations were $9.2 billion, up 10% year-on-year. Expenses of $8.1 billion were up 5% year-on-year, reflecting the impact of wage inflation and higher headcount.
In terms of credit performance this quarter, credit costs were $1.4 billion, reflecting reserve builds of $300 million in Card and $50 million in Home Lending. Net charge-offs were $1.1 billion, up about $500 million year-on-year, in line with expectations as delinquency levels continue to normalize across portfolios.
Next, the CIB on page five. CIB reported net income of $4.4 billion on revenue of $13.6 billion. Investment Banking revenue of $1.6 billion was down 24% year-on-year. IB fees were down 19%. We ranked number one with first quarter wallet share of 8.7%. In advisory, fees were down 6% compared to a strong first quarter last year. Our underwriting businesses continued to be affected by market conditions with fees down 34% for debt and 6% for equity.
In terms of the outlook, the dynamics remain the same. Our pipeline is relatively robust, but conversion is sensitive to market conditions and the economic outlook. We expect the second quarter and the rest of the year to remain challenging.
Moving to Markets, total revenue was $8.4 billion, down 4% year-on-year. Fixed income was flat. Rates was strong during the rally early in the quarter as well as through the elevated volatility in March. Credit was up on the back of higher client flows and Currencies & Emerging Markets was down relative to a very strong first quarter in the prior year. Equity Markets was down 12%, driven by lower revenues in derivatives relative to a strong first quarter in the prior year and lower client activity in cash.
Payments revenue was $2.4 billion, up 26% year-on-year. Excluding the net impact of equity investments, primarily a gain in the prior year, it was up 55% with the growth driven by higher rates, partially offset by lower deposit balances. Security Services revenue of $1.1 billion was up 7% year-on-year, driven by higher rates, partially offset by lower deposit balances and market levels. Expenses of $7.5 billion were up 2% year-on-year as higher headcount and wage inflation were largely offset by lower revenue-related compensation.
Moving to the Commercial Bank on page six. Commercial Banking reported net income of $1.3 billion. Revenue of $3.5 billion was up 46% year-on-year, driven by higher deposit margins. Payments revenue of $2 billion was up 98% year-on-year, driven by higher rates and gross Investment Banking revenue of $881 million was up 21% year-on-year on increased M&A and bond underwriting from large deal activity. Expenses of $1.3 billion were up 16% year-on-year, largely driven by higher compensation expense, including front-office hiring and technology investments as well as higher volume related expense.
Average deposits were down 16% year-on-year and 5% quarter-on-quarter, predominantly driven by continued attrition and non-operating deposits as well as seasonally lower balances. Loans were up 13% year-on-year and 1% sequentially. C&I loans were up 1% quarter-on-quarter with somewhat different dynamics based on client sites.
In Middle Market Banking, higher rates and recession concerns decreased new loan demand and utilization, which is also leading to weakness in capex spending. In Corporate Client Banking, utilization rates increased modestly quarter-on-quarter as capital market conditions led more clients to opt for bank debt.
CRE loans were also up 1% sequentially with higher rates creating headwinds for both originations and prepayments. And given the recent focus on commercial real estate, let me remind you that our office sector exposure is less than 10% of our portfolio and is focused in the urban dense markets, and nearly two-thirds of our loans are multifamily, primarily in supply-constrained markets. Finally, credit costs of $417 million included a net reserve build of $379 million, predominantly driven by what I mentioned upfront.
Then to complete our lines of business, AWM on page seven. Asset & Wealth Management reported net income of $1.4 billion, pretax margin of 35%. Revenue of $4.8 billion was up 11% year-on-year, driven by higher deposit margins on lower balances and a valuation gain on our initial investment triggered by taking full ownership of our asset management joint venture in China, partially offset by the impact of lower average market levels on management fees and lower performance fees. Expenses of $3.1 billion were up 8% year-on-year, predominantly driven by compensation, reflecting growth in our private banking advisor teams, higher revenue-related compensation, and the run rate impact of acquisitions.
For the quarter, net long-term inflows were $47 billion, led by fixed income and equities. And in liquidity, we saw net inflows of $93 billion, inclusive of our ongoing deposit migration. AUM of $3 trillion was up 2% year-on-year and overall client assets of $4.3 trillion were up 6%, driven by continued net inflows into liquidity and long-term products. And finally, loans were down 1% quarter-on-quarter, driven by lower securities-based lending, while average deposits were down 5%.
Turning to Corporate on page eight. Corporate reported net income of $244 million. Revenue was $985 million compared to a net loss of $881 million last year. NII was $1.7 billion, up $2.3 billion year-on-year due to the impact of higher rates. NIR was a loss of $755 million compared with a loss of $345 million in the prior year and included the net investment securities losses I mentioned earlier. Expenses of $160 million were down $24 million year-on-year. And credit costs of $370 million were driven by reserve builds on a couple of single name exposures.
Next, the outlook on page nine. We now expect 2023 NII and NII ex-Markets to be approximately $81 billion. This increase in guidance is primarily driven by lower rate paid assumptions across both consumer and wholesale in light of the expectation of Fed cuts later in the year as well as slightly higher card revolving balances. Note that in line with my comments at the outset, recent deposit balance increases are not a meaningful contributor to the upward revision in the NII outlook, given that we expect a meaningful portion of the recent inflows to reverse later in the year.
I would point out that this outlook still embeds significant reprice lags. We think a more sustainable NII ex-Markets run rate in the medium term is well below this quarter's $84 billion as well as below the $80 billion that is implied for the rest of the year by our full-year guidance. And while we don't know exactly when this lower run rate will be reached, when it happens, we believe it will be around the mid-70s.
And of course, as we mentioned last quarter, this NII outlook remains highly sensitive to the uncertainty associated with the timing and the extent of deposit reprice, investment portfolio decisions, the dynamics of QT and RRP, the trajectory of Fed funds as well as the broader macroeconomic environment, including its effect on loan growth. Separately, it's worth noting that Markets NII may start to trend slightly positive towards the end of the year as a function of mix and rate effects.
Moving to expenses, our outlook for 2023 continues to be about $81 billion. Importantly, this does not currently include the impact of the pending FDIC special assessment. And on credit, we continue to expect the 2023 card net charge-off rate to be approximately 2.6%.
So to wrap up, our strong results this quarter once again highlight the earnings power of this diversified franchise. We have benefited from our fortress principles and commitment to invest, which we will continue to do as we head into an increasingly uncertain environment.
With that, operator, please open the line for Q&A.
