By David Benoit 

JPMorgan Chase & Co. posted its highest-ever quarterly profit after releasing $2.9 billion in funds it had set aside to cover soured loans.

The bank's profit jumped 42% to $12.14 billion, or $3.79 per share, far past the $2.62 per share forecast by analysts polled by FactSet. A year earlier, JPMorgan had reported a quarterly profit of $8.52 billion, or $2.57 a share.

The nation's biggest bank reported revenue of $29.22 billion for the quarter, up 3% from a year earlier and topping analysts' expectations for $28.67 billion.

For the full year, through an economic spiral and an uneven recovery, JPMorgan posted record revenue of $119.54 billion, up 4% from 2019. The growth was powered by the Wall Street operation, which churned out stocks and bonds for clients eager to raise capital and trade securities amid an unsettled economy and record-high markets.

Still, the coronavirus pandemic's impact on businesses and consumers forced the bank to put aside billions of dollars for potential loan losses earlier in the year. Full-year profit fell 20% to $29.13 billion.

In the fourth quarter, the bank was able to take down some of those buffers, pulling out $2.9 billion of its reserves. The economy has fared better than what executives had feared throughout the spring and summer.

The bank said loan charge-offs fell from both the third quarter and prior-year periods, evidence that 10 months into the pandemic customers are still paying.

In a statement, JPMorgan Chief Executive Jamie Dimon said the reserve release reflected the impact of vaccines and fiscal stimulus plans, but the bank remains positioned for "significant near-term economic uncertainty."

In a call with analysts later, Mr. Dimon emphasized that he didn't consider a reserve release to be core or recurring profit. "It's ink on paper," he said.

Bankers also warned that some consumers will be hit hard later this year if government relief programs wear off, especially lower-income customers. Millions remain unemployed, small businesses have closed shop at a rapid pace and coronavirus is running rampant throughout the country.

One reason the banks have weathered the coronavirus economy so well is because over the past decade they have focused on well-off consumers and big businesses. Mr. Dimon noted that most of JPMorgan's customers are prime borrowers, who have "a lot more income, a lot more savings, housing prices are up, they did not lose their jobs." At the bottom of the pyramid, he said, "it's the opposite."

Bank shares fell broadly Friday, along with the overall markets, as investors were spooked by disappointing retail sales. JPMorgan shares were down 2% at midday trading. Citigroup Inc. and Wells Fargo & Co., which also reported earnings, fell 6% and 7%, respectively.

While JPMorgan, Citigroup and Wells Fargo all beat earnings expectations, JPMorgan stood above the others. While revenue rose 3% at JPMorgan and beat expectations, revenue fell 10% at Citigroup and Wells Fargo and missed expectations.

JPMorgan's corporate and investment bank blew past records for profit and revenue. Profit rose 82% to $5.35 billion for the latest quarter, and notched $17.09 billion for the year. Fourth-quarter revenue rose 17% to $11.35 billion. Revenue for the year was $49.28 billion, topping what had been a record $39.27 billion in 2019.

Trading revenue rose 20% in the quarter, and investment banking fees increased 34%.

On the consumer side, fourth-quarter profit rose 3% to $4.33 billion and revenue fell 8%. Profit was boosted by a reserve release and strong mortgage fees.

The commercial bank's profit more than doubled to $2 billion thanks to its reserve release. And in asset and wealth management, profit fell 2% to $786 million.

The bank's lending business has faced severe margin pressure during the year. Low interest rates aimed at combating an economic collapse and a surge in deposits squeeze the bank's traditional profit-making business of taking deposits and lending them out for interest.

The margin between what it collects on loans and what it pays for deposits fell to 1.80% in the quarter from 2.38% a year ago.

Deposits surged another 7% from the previous quarter to $2.14 trillion as companies and consumers looked for a safe place to store their money. The bank took in a total of $582 billion in deposits for the year.

Write to David Benoit at


(END) Dow Jones Newswires

January 15, 2021 12:22 ET (17:22 GMT)

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