JPMorgan Surprises Analysts With Results

JPMorgan Chase & Co. (NYSE:JPM) surprised analysts with its fourth quarter results. Fourth-quarter profit for the bank rose by 24 percent. Net income increased to $6.73 billion, or $1.71 a share, from $5.43 billion, or $1.32, a year earlier. Adjusted earnings per share were $1.62, beating the $1.43 estimate of surveyed analysts.

Revenue rose 2 percent to $24.3 billion, higher than the $24.2 billion average estimate. Expenses fell 3 percent to $13.8 billion, compared with an estimate of $14 billion. JPMorgan Chairman and CEO Jamie Dimon said in a release, “Our results this quarter were a strong end to another record year, reflecting our intense client focus and solid performance across our businesses.”

During the quarter, the bank set aside less money for bad loans. The provision for credit losses was $864 million, down from $1.25 billion a year earlier and better than the $1.39 billion analyst estimate. The bank pulled about $400 million from bad-loan reserves in the mortgage, energy and metals businesses.

Fixed-income trading also contributed to the gains. Fixed-income trading revenue increased 31 percent to $3.37 billion, higher than the $3.26 billion average estimate. Equities-trading revenue rose 8.1 percent to $1.15 billion. Net income in asset management increased 16 percent to $586 million.

Earnings at the corporate and investment bank almost doubled to $3.43 billion, while expenses declined 6 percent. Investment-banking revenue rose 1 percent to $1.5 billion, lower than analysts’ $1.59 billion estimate. Profit from consumer and community banking fell 2 percent to $2.36 billion. Revenue was down 2 percent from a year earlier at $11 billion. Commercial banking profit increased 25 percent to $687 million.

Card income fell 36 percent to $918 million. However, Dimon said, “Our credit card sales volume was a record, and for the year we had over $1 trillion of merchant processing volume.” The earnings report marks the bank’s first results since the Federal Reserve raised its key interest rate.

JPMorgan is currently the biggest bank in the U.S. by market capitalization. JPMorgan surpassed Wells Fargo last year as Wells was suffering from the fallout of a phony customer account scandal. JPMorgan has one of the largest global investment banks, so market activity affects its earnings significantly. It was widely expected to benefit from a current wave of trading in stocks and bonds.

JPMorgan’s shares have surged 23 percent since Donald Trump’s surprise victory in the U.S. election. Trump’s plans to cut taxes, ease regulations and boost infrastructure spending are expected to help profits. The stock has been near 52-week highs since mid-December.

 

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