JPMorgan Q4 Profit Down 15%, But Results Top Estimates

(RTTNews) - US investment bank JPMorgan Chase & Co. (JPM) reported Friday a profit for the fourth quarter that decreased 15 percent from last year, reflecting double-digit net interest income growth, boosted by higher interest rates. Both adjusted earnings per share and revenues for the quarter topped analysts' expectations.

For the fourth quarter, net income declined 15 percent to $9.31 billion or $3.04 per share from $11.01 billion or $3.57 per share in the prior-year quarter. Excluding items, adjusted net income for the quarter was $3.97 per share.

On average, 19 analysts polled by Thomson Reuters expected the company to report earnings of $3.36 per share for the quarter. Analysts' estimates typically exclude special items.

Net income attributable to First Republic was $647 million. This reflected $1.3 billion of net interest income, $533 million of noninterest revenue and $890 million of noninterest expense. The provision for credit losses was $125 million, predominantly in Commercial Banking.

The provision for credit losses was $2.76 billion, reflecting a net reserve build of $598 million and net charge-offs of $2.2 billion, up 21 percent from last year's $2.29 billion.

Total net revenue on a reported basis was $38.57 billion. On a managed basis, net revenue was $39.94 billion, up 12 percent from $35.57 billion in the previous year. The Street expected revenues of $39.78 billion for the quarter.

Net interest income was $24.2 billion, up 19 percent from last year. Net interest income excluding Markets was $23.6 billion, up 18 percent, driven by higher rates and higher revolving balances in Card Services, partially offset by lower deposit balances.

Non-interest revenue was $15.8 billion, up 3 percent from last year, largely driven by higher asset management and Investment Banking fees. Noninterest expense was $24.49 billion, up 29 percent, driven largely by the FDIC special assessment and higher compensation, including front office incentive compensation, wage inflation and growth in front office and technology employees.

Banking & Wealth Management net revenue was $10.88 billion, up 15 percent, predominantly driven by higher net interest income and higher asset management revenue.

Card Services & Auto net revenue was $6.06 billion, up 8 percent, predominantly driven by higher Card Services net interest income on higher revolving balances, partially offset by lower auto operating lease income.

Banking revenue grew 6 percent to $4.06 billion, and Markets & Securities Services revenue improved 2 percent to $6.90 billion from last year.

Commercial Banking net revenue increased 18 percent to $4.02 billion from last year, predominantly driven by higher net interest income, payments revenue and investment banking revenue.

Asset & Wealth Management net revenues improved 11 percent to $5.10 billion from last year, driven by higher management fees on strong net inflows and higher average market levels, predominantly offset by lower net interest income.

"We continue to believe that the recent series of regulatory and legislative proposals, including Basel III endgame, could cause serious harm to consumers, businesses, and markets. We hope that regulators will make the necessary adjustments so the rules promote a strong financial system without causing undue consequences for end users," Dimon added.

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