JP Morgan Chase announced Friday that its fourth-quarter profit fell as it paid $2.9 billion in fees related to government foreclosures on local banks that failed last year.
Below is a comparison of the company’s report and the forecasts of analysts surveyed by LSEG (formerly Refinitiv).
- Earnings per share: $3.04, may not compare to expectations of $3.32.
- Revenue: $39.94 billion vs. $39.78 billion expected.
The bank said quarterly profit fell 15% from a year earlier to $9.31 billion, or $3.04 per share. JPMorgan said its profit would have been $3.97 per share, excluding $743 million in fees and investment losses related to the regional bank crisis.
Sales rose 12% to $39.94 billion, exceeding analyst expectations.
JPMorgan Chief Executive Jamie Dimon said the nation’s largest bank by assets posted record full-year results as the company beat expectations for net interest income and credit quality. The bank said it will generate nearly $50 billion in profits in 2023, $4.1 billion of which will come from First Republic.
Just as it did during the 2008 financial crisis, JPMorgan emerged bigger and more profitable from last year’s regional banking turmoil after acquiring First Republic, a middle-market lender to the wealthy on the coasts. The Federal Deposit Insurance Corporation has hit major U.S. banks with special assessments to cover losses from funds that supported uninsured depositors in foreclosed local banks.
JPMorgan stock rose 1.9% during premarket trading.
Despite the banks’ performance, Mr. Dimon took a cautious view of the U.S. economy.
“The market now expects a soft landing as consumers continue to spend and the U.S. economy remains resilient,” Dimon said in a statement.
But deficit spending and supply chain adjustments “could cause inflation to become more sticky and interest rates to be higher than the market expects,” he said. Risks to markets and the economy include central bank measures to curb aid programs and wars in Ukraine and the Middle East, he added.
“Due to these significant and somewhat unprecedented forces, we remain vigilant,” he said.
While the bank has weathered the interest rate environment well since the Federal Reserve began raising interest rates in early 2022, smaller peers have seen their profits come under pressure.
The industry is being forced to pay out deposits as customers move cash into higher-yielding financial products, squeezing margins. At the same time, rising yields mean the value of banks’ bond holdings will fall, leading to unrealized losses and putting pressure on capital levels.
Concerns are also growing over rising losses on commercial loans, particularly office building debt, and rising credit card defaults.
Analysts will want to hear from Mr. Dimon about his guidance on net interest income and loan losses this year, as well as the bank’s efforts to rein in future increases in capital requirements.
Bank stocks rebounded in November from a slump on hopes that the Fed could successfully control inflation and cut interest rates this year.
JPMorgan’s stock has risen 27% in the last year, the best performance among its large banks, outpacing the KBW Bank Index’s 5% decline.
This story is developing. Please check back for the latest information.
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