JPMorgan Chase Reports Decline in Q4 Profit Due to Government Seizures
JPMorgan Chase announced on Friday that its fourth-quarter profit declined after paying a $2.9 billion fee related to the government seizures of failed regional banks in the previous year. The bank reported earnings per share of $3.04, which may not compare favorably to the expected $3.32, and revenue of $39.94 billion, slightly surpassing the expected $39.78 billion.
Quarterly earnings for JPMorgan slipped 15% to $9.31 billion, or $3.04 per share, compared to the previous year. However, excluding the fee tied to the regional banking crisis and investment losses, earnings would have been $3.97 per share. Revenue increased by 12% to $39.94 billion, exceeding analysts’ expectations.
JPMorgan CEO Jamie Dimon attributed the bank’s record full-year results to better-than-expected performance in net interest income and credit quality. The bank generated nearly $50 billion in profit in 2023, with $4.1 billion coming from First Republic, which was acquired during the regional banking chaos.
Similar to its experience during the 2008 financial crisis, JPMorgan emerged from last year’s regional banking turmoil as a larger and more profitable institution. The bank’s shares rose 1.9% in premarket trading.
Despite the bank’s strong performance, Dimon expressed caution about the American economy. He noted that deficit spending and supply chain adjustments could lead to stickier inflation and higher rates than anticipated by the markets. Risks to the markets and economies include central banks’ actions to reduce support programs and conflicts in Ukraine and the Middle East.
While JPMorgan has managed well in the rate environment since the Federal Reserve began raising rates in 2022, smaller banks have faced squeezed profits due to increased deposit costs and unrealized losses from falling bond values. Concerns are also growing about rising losses from commercial loans, particularly office building debt, and higher credit card defaults.
Analysts will be interested in hearing Dimon’s perspective on banks’ efforts to mitigate upcoming increases in capital requirements. In November, bank stocks rebounded on expectations that the Fed had successfully managed inflation and could cut rates this year. JPMorgan’s shares performed exceptionally well in 2023, rising 27% compared to a 5% decline in the KBW Bank Index.
Please note that this story is developing, and updates will be provided.
