JPMorgan's Profit Hurt by Tax Law -- Update
January 12 2018 - 7:46AM
Dow Jones News
By Emily Glazer
JPMorgan Chase & Co. said Friday that fourth-quarter profit
fell from a year earlier because of one-time charges related to the
recently passed tax overhaul, while earnings excluding that impact
was roughly flat.
Shares rose 0.7% to $111.65 in premarket trading. The stock is
up 29% over the past year.
The biggest U.S. bank by assets reported net income of $4.23
billion, or $1.07 a share. That is down nearly 40% from a year
earlier because of a $2.4 billion charge related to the new tax
law. Excluding that charge, the bank said, earnings per share were
$1.76, up nearly 3% from a year ago.
Analysts polled by Thomson Reuters had expected earnings of
$1.69 a share. On a reported basis, or under generally accepted
accounting principles, earnings per share were expected at $1.16,
reflecting the tax-law charges.
Investors will next turn to the bank's earnings call Friday
morning to find out whether Chief Executive James Dimon or Chief
Financial Officer Marianne Lake will shed light on topics ranging
from impact of the tax law and its future benefits, as well as the
bank's trading revenue, which could foreshadow results across Wall
Street.
JPMorgan's trading revenues decreased 34% to $3.37 billion from
$4.52 billion a year earlier.
Wall Street was expecting a soft quarter after executives at a
number of banks said trading had remained subdued, a source of
concern for firms for much of 2017.
The tax charges were largely expected after Ms. Lake said during
an early December investor conference -- before the tax bill passed
-- that JPMorgan could have a one-time hit of up to $2 billion in
the fourth quarter if the law was enacted in 2017.
Charges related to changes in the value of the bank's deferred
tax assets and the need to repatriate profits held overseas. Such
charges could reduce the earnings the bank reports, although
investors are likely to look to the core operating results because
these hits will be one-time in nature.
The boost from still low -- but rising -- interest rates also
will likely be a major focus for investors, as an increase in rates
can help the profitability of big consumer lenders like
JPMorgan.
Costs increased to $14.59 billion from $13.83 billion a year
earlier. Ms. Lake said during the December investor presentation
that the bank expects the "absolute dollars to continue to grow"
based on several factors and JPMorgan continues to look for
opportunities to make "strategically good investments."
Return on equity, a key measure of profitability, was 7% in the
fourth quarter compared with 11% a year ago.
Write to Emily Glazer at emily.glazer@wsj.com
(END) Dow Jones Newswires
January 12, 2018 07:31 ET (12:31 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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