Chief Financial Officer at JPMorgan Chase & Co.
Thanks, operator. 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 $8.6 billion, EPS of $2.76, on revenue of $31.6 billion and delivered an ROTCE of 17%. Touching on a few highlights. We had another quarter of strong performance in Markets which generated revenue of nearly $8 billion. Credit is still quite healthy and net charge-offs remain historically low. And there continue to be positive trends in loan growth across our businesses, with average loans up 7% year-on-year and 2% quarter-on-quarter.
On Page 2, we have some more detail. Revenue of $31.6 billion was up $235 million or 1% year-on-year. NII ex-Markets was up $2.8 billion or 26%, driven by higher rates and balance sheet growth. NIR ex-Markets was down $3.6 billion or 26%, largely driven by lower IB fees and higher card acquisition costs. And Markets revenue was up $1 billion or 15% year-on-year. Expenses of $18.7 billion were up $1.1 billion or 6% year-on-year, predominantly on higher investments and structural expenses, partially offset by lower volume and revenue-related expenses. And credit costs were $1.1 billion, which included net charge-offs of $657 million and reserve builds of $428 million, reflecting loan growth as well as a modest deterioration in the economic outlook.
On to balance sheet and capital on Page 3. Let's start by talking about our plans for capital management over the coming quarters. The new 4% SCB will raise our standardized CET1 requirement to 12% effective in the fourth quarter. And the 4% G-SIB effective in 1Q '23 further raises this requirement to 12.5%.
At Investor Day, we said that we expected SCB to be higher and made it clear that in the near term, share buybacks would be significantly reduced in order to build capital for the increased requirements. In light of the SCB coming in even higher than expected, we have paused buybacks for the near term.
As we discussed at Investor Day and as we show at the bottom of this presentation page, our organic capital generation allows us to rapidly build capital in excess of future requirements with a current target of roughly 12.5% in the fourth quarter. Any access over the regulatory requirements offers us protection against a range of economic scenarios with room to deploy capital in line with our strategic priorities. We have a long established track record of balance sheet discipline across the company, and this quarter's RWA reduction shows evidence of this discipline.
Turning to this quarter's results. You can see that our CET1 ratio of 12.2% and is up 30 basis points from the prior quarter. RWA was down approximately $44 billion with growth in franchise lending being more than offset by the combination of active balance sheet management and the normalization of market risk RWA from the first quarter. CET1 capital was slightly down as earnings were offset by distributions and the impact of AOCI drawdowns in our AFS portfolio.
Now let's go to our businesses, starting with Consumer & Community Banking on Page 4. Before I review CCB's performance, let me touch on what we're seeing in our data regarding the health of the U.S. consumer. Spend is still healthy with combined debit and credit spend up 15% year-on-year. We see the impact of inflation and higher nondiscretionary spend across income segments. Notably, the average consumer is spending 35% more year-on-year on gas and approximately 6% more on recurring bills and other nondiscretionary categories. At the same time, we have yet to observe a pullback in discretionary spending, including in the lower income segments, with travel and dining growing a robust 34% year-on-year overall. And with spending growing faster than incomes, median deposit balances are down across income segments for the first time since the pandemic started, though cash buffers still remain elevated.
With that as a backdrop, this quarter, CCB reported net income of $3.1 billion on revenue of $12.6 billion, which was down 1% year-on-year. In Consumer & Business Banking, revenue was up 9% year-on-year, driven by growth in deposits. Deposits were up 13% year-on-year and 2% quarter-on-quarter. And client investment assets were down 7% year-on-year, driven by market performance, partially offset by flows.
Home Lending revenue was down 26% year-on-year as the rate environment drove both lower production revenue and tighter spreads, partially offset by higher net servicing revenue. And mortgage origination volume of $22 billion was down 45%.
Moving to Card & Auto. Revenue was down 6% year-on-year, reflecting higher acquisition costs on strong new card account originations and lower auto lease income, largely offset by higher card NII. Card outstandings were up 16% and revolving balances were up 9%. And in auto, originations were $7 billion, down 44% from record levels a year ago due to continued lack of vehicle supply and rising rates while loans were up 2%. Expenses of $7.7 billion were up 9% year-on-year driven by higher investments and structural expenses, partially offset by lower volume and revenue-related expenses.
In terms of actual credit performance this quarter, credit costs were $761 million, reflecting net charge-offs of $611 million, down $121 million year-on-year, driven by card, and a reserve build of $150 million in card driven by loan growth.
Next to CIB on Page 5. CIB reported net income of $3.7 billion on revenue of $11.9 billion. There were a number of notable items this quarter, including net markdowns on certain equity investments of approximately $370 million with about $345 million reflected in payments and markdowns on the bridge book of approximately $250 million in IB revenue.
Investment Banking revenue of $1.4 billion was down 61% year-on-year or down 53%, excluding the bridge book markdowns. IB fees were down 54% versus an all-time record quarter last year. We maintained our number one rank with a year-to-date wallet share of 8.1%. In advisory, fees were down 28%, reflecting a decline in announced activity which started in the first quarter. The volatile market resulted in muted issuance in our underwriting businesses. Underwriting fees were down 53% for debt and down 77% for equity.
In terms of outlook, while our existing pipeline remains healthy, conversion of the deal backlog may be challenging if the current headwinds continue. Lending revenue of $410 million was up 79% versus the prior year, driven by gains on mark-to-market hedges as well as higher loan balances.
Moving to Markets. Total revenue was $7.8 billion, up 15% year-on-year in both fixed income and equities against a strong quarter last year. In fixed income, elevated volatility drove both increased client flows and robust trading results in the macro franchise, most notably in currencies and emerging markets. This was partially offset by credit unsecuritized products in a challenging spread environment.
In Equity Markets, we had a strong second quarter. And again, increased volatility produced a strong performance in derivatives. Credit Adjustments & Other was a loss of $218 million, largely driven by funding spread widening. Payments revenue was $1.5 billion, up 1% year-on-year or up 25% excluding the markdowns on equity investments. The year-on-year growth was primarily driven by higher rates. Security services revenue of $1.2 billion was up 6% year-on-year, with growth in fees and higher rates more than offsetting the impact of lower market levels. Expenses of $6.7 billion were up 3% year-on-year, predominantly driven by higher structural expenses and investments, largely offset by lower revenue-related compensation.
Moving to Commercial Banking on Page 6. Commercial Banking reported net income of $1 billion. Revenue of $2.7 billion was up 8% year-on-year, driven by higher deposit margins, partially offset by lower Investment Banking revenue. Gross Investment Banking revenue of $788 million was down 32%, driven by lower debt and equity underwriting activity. Expenses of $1.2 billion were up 18% year-on-year, predominantly driven by higher structural and volume and revenue-related expenses. Deposits were down 5% quarter-on-quarter, driven by migration of nonoperating deposits into higher-yielding alternatives, which we expect to continue given the current rate environment. Loans were up 4% sequentially.
C&I loans were up 6%, reflecting higher revolver utilization and originations across Middle Market and Corporate Client Banking. CRE loans were up 3%, driven by strong loan originations and funding in commercial term lending and real estate banking. Finally, Credit costs of $209 million were largely driven by loan growth, while net charge-offs remain historically low.
And then to complete our lines of business, AWM on Page 7. Asset & Wealth Management reported net income of $1 billion with pretax margin of 31%. For the quarter, revenue of $4.3 billion was up 5% year-on-year, driven by growth in deposits and loans as well as higher margins, partially offset by investment valuation losses versus gains in the prior year. In addition, reductions in management fees linked to this year's market declines have been almost entirely offset by the removal of most money market fund fee waivers. Expenses of $2.9 billion were up 13% year-on-year, largely driven by investments in our private banking advisor teams, technology and asset management as well as higher volume and revenue-related expenses. For the quarter, net long-term inflows of $6 billion were driven by equities.
AUM of $2.7 trillion and overall client assets of $3.8 trillion, down 8% and 6% year-on-year, respectively, were predominantly driven by lower market levels, partially offset by net long-term inflows. And finally, loans were up 1% quarter-on-quarter while deposits were down 7% sequentially, driven by seasonal client tax payments.
Turning to Corporate on Page 8. Corporate reported a net loss of $174 million. Revenue was $80 million versus a loss in the prior year. NII was $324 million, up $1.3 billion, predominantly due to the impact of higher rates. And expenses of $206 million were lower by $309 million year-on-year.
Next, the outlook on Page 9. You will recall that at Investor Day, we expected NII ex-Markets for 2022 to be in excess of $56 billion. We now expect it to be in excess of $58 billion, reflecting Fed funds reaching 3.5% by year-end. We still expect adjusted expense to be approximately $77 billion and the card net charge-off rate to be less than 2% for 2022.
So to wrap up, the company's performance was strong again this quarter in what was a complex operating environment. As we look forward, we are mindful of the elevated uncertainty in the global economy, but we feel confident that we are prepared and well positioned for a broad range of outcomes.
With that, operator, please open up the line for Q&A.