Commercial Banking segment’s net income remains flat
J.P. Morgan’s (JPM) Commercial Banking segment’s net income was relatively flat compared to the prior year. Net revenue increased compared to the prior year, driven by higher non-interest revenue due to higher investment banking revenue. Net interest income decreased slightly compared to the prior year, largely offset by higher balances. This reflected spread compression on loan and liability products.
You can read more about J.P. Morgan’s Commercial Banking segment in the article JP Morgan: Commercial Banking and Firm-Wide Synergies. The above chart provides highlights of the company’s Commercial Banking and Asset Management segment’s 1Q15 performance.
The segment’s expenses increase
The Commercial Banking segment’s non-interest expense increased, driven by higher investment in controls. The company expects investments in controls to stabilize going forward.
The provision for credit losses was $61 million, $56 million higher than the prior year. This was driven by higher reserve build primarily related to oil and gas exposures and net charge-offs in the current period compared to net recoveries in the prior year. The bank expects some further reserve builds in 2015 if the volatility in oil prices continues.
Asset Management segment’s income increases
The Asset Management segment’s net income increased from the prior year. This reflected higher revenue, largely offset by higher non-interest expense. You can read more about the bank’s Asset Management segment in the article JP Morgan Grows Institutional Asset Management Business.
Net revenue increased from the prior year, driven by higher non-interest revenue on net client inflows and higher market levels. It was also driven by higher net interest income on higher deposit and loan balances. Non-interest expense increased from the prior year, driven by continued investment in both infrastructure and controls.
Growth in assets under management
Assets under management increased by $111 billion from the prior year. This was due to net inflows to long-term and liquidity products and the effect of higher market levels.
You cany invest in the big four banks—J.P. Morgan, Wells Fargo (WFC), Bank of America (BAC), and Citigroup (C)—through ETFs like the Financial Select Sector SPDR ETF (XLF). Together, these banks form ~27% of XLF.