JPMorgan leads Q4 earnings

JPMorgan Chase reported fourth-quarter results that exceeded expectations, as the bank’s interest income rose by 48% due to higher rates and loan growth. The bank reported earnings per share of $3.57, surpassing the $3.07 estimate after adjusting for one-time items. Additionally, revenue came in at $35.57 billion, compared to the estimated $34.3 billion. The bank’s profit increased 6% from the previous year to $11.01 billion, and revenue rose by 17% to $35.57 billion. This was largely due to an increase in net interest income, which reached $20.3 billion, surpassing the StreetAccount estimate by $1 billion.

However, the bank also reported a $2.3 billion provision for credit losses in the quarter, a 49% increase from the previous quarter. This exceeded the $1.96 billion StreetAccount estimate as the bank set aside money for expected defaults. The increase was driven by a “modest deterioration” in the bank’s macroeconomic outlook and growth in loans from customers using Chase credit cards.

CFO Jeremy Barnum said in a media call that JPMorgan economists expect a mild recession in the fourth quarter of this year, with unemployment potentially reaching 4.9%. The bank’s increase in credit provisioning exceeded that of rivals Bank of America and Wells Fargo.

CEO Jamie Dimon stated that the U.S. economy remains strong due to well-financed consumers and businesses, but highlighted potential risks such as geopolitical tensions, vulnerable energy and food supplies, persistent inflation, and quantitative tightening. He also gave muted guidance for 2023, expecting around $73 billion in net interest income and expenses of around $81 billion due to wage inflation, hiring plans, and investments in technology.