Updating Our JPMorgan Thesis After Q1 Earnings Beat Expectations

Our prior analysis argued that JPMorgan's record $58.5 billion in revenue and $54 billion in net income for 2024 represented peak earnings driven by elevated net interest income from the rate cycle. The expectation was for NII to compress as the Fed cut rates, bringing earnings back toward $45-48 billion in normalised terms. The stock was a hold at $210, with the risk skewed to the downside if rate cuts accelerated.

The Fed did cut — 100 basis points between September 2024 and March 2025. And NII held up better than any model predicted.

JPMorgan's net interest income proved more resilient than consensus expected for two reasons. First, deposit migration — the shift from non-interest-bearing to interest-bearing accounts — slowed dramatically in Q3-Q4 2025. The bank retained a larger share of its low-cost deposit base than peers, a function of the Chase consumer franchise that competitors simply cannot replicate.

Second, the loan book grew. Commercial and industrial lending expanded 8% year-over-year, and card receivables hit new highs. More loans at still-elevated rates offset the margin compression from Fed cuts. The net result: Q1 2026 NII came in at approximately $24 billion annualised, down just 5% from the 2024 peak despite 100 basis points of cuts.

The last time a major bank navigated a rate-cutting cycle with NII compression of less than 10%, it was JPMorgan itself in 2019-2020. The franchise advantage compounds over time.

JPMorgan returned $21 billion to shareholders in 2025 through buybacks and dividends. The CET1 ratio sits at 15.2% — well above the regulatory minimum of 11.9% — giving management room to continue aggressive capital return.

The dividend yield at current prices is 2.1%. Not eye-catching. But the total shareholder yield including buybacks is closer to 5.5%. That is capital allocation competence from a bank that generates returns on tangible equity above 20%. Jamie Dimon's succession planning — with the appointment of key divisional heads to expanded roles — has proceeded without disruption.