JPMorgan Chase, the largest U.S. bank by assets, reported fourth-quarter results on Friday that beat profit estimates but fell short on revenue forecasts.
Earnings Down on Charges While Net Revenue Rises
The bank posted earnings per share of $3.57 on profit of $11 billion, exceeding Wall Street projections. However, revenue of $34.5 billion missed expectations.
Several special charges impacted JPMorgan’s bottom line, including nearly $2 billion set aside for credit losses amid rising recession fears. The bank took $1.4 billion in net investment securities losses in the quarter.
Still, total net revenue rose 18% from a year ago thanks to higher net interest income and fee revenue.
JPMorgan’s key quarterly figures:
| Metric | Q4 2022 | Year-Ago | Estimates |
|---|---|---|---|
| Earnings Per Share | $3.57 | $3.33 | $3.11 |
| Net Revenue | $34.5B | $29.3B | $34.9B |
| Net Income | $11B | $10.4B | $9.8B |
Economic Outlook Weighs on Guidance
Like its Wall Street peers, JPMorgan is bracing for potential economic hurdles in 2023. Management modestly tempered full-year guidance relative to 2022’s record results.
The bank sees returns on tangible common equity down to 17% this year, assuming higher credit costs, volatility in capital markets and other headwinds persist. Still, JPMorgan believes 2023 will be “solidly profitable” barring a mild recession.
“We remain vigilant around the economic outlook and are prepared for a range of scenarios,” CEO Jamie Dimon stated.
Strong Position Heading into Period of Uncertainty
The mixed quarter caps a turbulent year for the banking sector grappling with inflation, market swings and recession worries. Yet analysts see JPMorgan weathering the current economic crosscurrents from a position of strength.
With diverse business lines, fortress balance sheet and leading market share, JPMorgan generated over $40 billion in net income for a second straight year in 2022. Its stock also outpaced peers last year.
“JPMorgan has among the best—if not the best—underlying fundamental backdrop among the money centers,” Wells Fargo analyst Mike Mayo commented on earnings day.
Ongoing growth in home and auto lending alongside higher interest rates could further aid revenues in 2023. And JPMorgan’s sizable capital cushion gives flexibility to reward shareholders via dividends and buybacks if conditions improve.
For now, all eyes are on US consumers and corporations to gauge when widely expected recession headwinds might materialize in the coming months.
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