JPMorgan Quarterly Profit Jumps 42% -- Update
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
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
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%,
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
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
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 email@example.com
(END) Dow Jones Newswires
January 15, 2021 12:22 ET (17:22 GMT)
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