Earnings Season has finally kicked off! We chase JP Morgan Chase on its Earnings

JP Morgan Earnings topped estimates and here’s all you need to know. The bank posted profits of $11.7 billion for the quarter, that’s an increase of $2.2 billion from a year-ago quarter. Why did the profits increase? It was helped by a $2.1 billion release of reserves set aside last year for bad loans.

Earnings totalled $3.74 per share, well ahead of the $3.00 per share projected by analysts, the reported revenue was $29.6 billion which was forecasted at $29.8 billion. “JPMorgan Chase delivered strong results as the economy continues to show good growth – despite the dampening effect of the Delta variant and supply chain disruptions,” Dimon said in a release.

As mergers and acquisitions activity is in full swing the bank saw a 45% increase from last year, which helped the bank offset a 5% drop in trading revenue.

Close attention needs to be paid to what the bank says about loan growth.

JPMorgan said Wednesday that average loans across the bank were up 5% and that combined debit and credit card spending was up 26%. It added that card payment rates have “stabilized,” which helped loan growth.

Will other banks follow suit in the earnings release? Or is this only the case with investment banks? Opinions?

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JP Morgan reported earnings the past week for 4Q. It beat expectations as the biggest U.S. bank benefitted from busy capital markets. Higher expenses and lower trading activity hit it.

It reported a profit of $10.4B and $30.3B in revenue! The EPS was $3.33. The Street was expecting profits of around $3.01 a share.

“JPMorganChase reported solid results across our businesses benefiting from elevated capital markets activity and a pick up in lending activity as firmwide average loans were up 6%,” Jamie Dimon, the bank’s chairman and CEO, said in a statement.

The investment banking division revenue was a banger as it was up by 28% from the previous year for this quarter to $3.2B. The division owed its performance to higher fees, unprecedented mergers and acquisitions and strong performance of IPOs!

Though not all is well, the trading activity was hit as market revenue fell 11% to $5.3B - which was down after a record quarter last year. The bank attributed the downfall to a challenging trading environment in rates, with lower sales in derivatives plus a 2% fall in equity markets.

The bank spent heavily on compensation and marketing, and technology which drove its expenses up to $17.9B.

Big bank stocks have been on a tear recently following a healthy economy and a tighter monetary policy environment. JPMorgan’s stock has increased by over 7% in the previous month.

Credit: Barron’s

Omicron variant, inflation and supply chain bottlenecks," Dimon said. “We remain optimistic on U.S. economic growth as business sentiment is upbeat, and consumers are benefiting from job and wage growth.”

The Federal Reserve agrees with Dimon about the state of the economy and is winding down pandemic-era stimulus and setting out to normalize financial conditions, including rising interest rates.

JPMorgan injected $2.9 billion of credit reserves into earnings in Q4 2020 and just $1.8 billion in Q4 2021. Reserve releases are also expected to continue slowing.

Credit: Barron’s & JPMorgan