JPMorgan Q4 Profit Up 6%, Results Top Estimates

JPMorgan Q4 Profit Up 6%, Results Top Estimates

January 20, 2023

US investment bank JPMorgan Chase & Co. (JPM) reported Friday a profit for the fourth quarter that increased six percent from last year, reflecting strong double-digit net interest income growth, boosted by higher interest rates. Both adjusted earnings per share and revenues for the quarter topped analysts’ expectations.

“JPMorgan Chase reported strong results in the fourth quarter as we earned $11.0 billion in net income, $34.5 billion in revenue and an ROTCE of 20%, while maintaining a fortress balance sheet and making all necessary investments,” said Jamie Dimon, Chairman and CEO.

For the fourth quarter, net income grew to $11.01 billion or $3.57 per share from $10.40 billion or $3.33 per share in the prior-year quarter.

On average, 21 analysts polled by Thomson Reuters expected the company to report earnings of $3.07 per share for the quarter. Analysts’ estimates typically exclude special items.

The provision for credit losses was $2.29 billion, reflecting a net reserve build of $1.4 billion and net charge-offs of $887 million, compared to last year’s net benefit of $1.29 billion.

Total net revenue on a reported basis was $34.55 billion. On a managed basis, net revenue was $35.57 billion, up 17 percent from $30.35 billion in the previous year. The Street expected revenues of $34.34 billion for the quarter.

Managed revenue included a $914 million gain on the sale of Visa B shares and $874 million of net investment securities losses.

Net interest income was $20.3 billion, up 48 percent from last year. Net interest income excluding Markets was $20.0 billion, up 72 percent, driven by higher rates.

Non-interest revenue was $15.3 billion, down 8 percent from last year, largely driven by lower Investment Banking fees, management and performance fees in AWM, operating lease income in Auto and net production revenue in Home Lending, largely offset by higher CIB Markets revenue.

Noninterest expense was $19.02 billion, up 6 percent, driven largely on higher structural expense, primarily compensation, and continued investments in the business, including technology and marketing, partially offset by lower legal expense.

Banking & Wealth Management net revenue was $9.63 billion, up 56 percent, predominantly driven by higher deposit margins.

Card Services & Auto net revenue was $5.63 billion, up 12 percent, predominantly driven by higher Card Services net interest income on higher revolving balances, partially offset by lower auto operating lease income.

Banking revenue declined 28 percent to $3.78 billion, while Markets & Securities Services revenue grew 8 percent to $6.77 billion from last year.

“As a result of the investments we have made over the years and our dedication to clients, the Firm is in a position of strength as the market leader in U.S. retail deposits, credit cards, business banking, Payments, Markets, investment banking and multifamily lending as some examples,” Dimon added.

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