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JPMorgan Shares Dip 3%, Q4 Profit Exceeds Expectations

By Cristian Bustos. Originally published at ValueWalk.

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Shares of JPMorgan Chase & Co (NYSE:JPM) dunked by 3% despite a solid fourth quarter that saw the bank surpass analysts’ profit expectations. Part of that success was grounded on fewer credit losses and the firm remains positive regarding the economic growth in the U.S.


Q4 2021 hedge fund letters, conferences and more

Better-Than-Expected-Earnings

As reported by CNBC, JPMorgan earnings per share topped $3.33 against a $3.01 estimate, while revenue hit $30.35 billion surpassing expectations of $29.9 billion. However, in premarket trading, shares dropped by 3%.

The firm seized a net benefit of $1.8 billion “from releasing reserves for loan losses that never materialized” —without the 47 cent per share increase, JPMorgan would have seen earnings of $2.86 per share.

In the release, CEO Jamie Dimon was positive and said: “The economy continues to do quite well despite headwinds related to the Omicron variant, inflation and supply chain bottlenecks.  Credit continues to be healthy with exceptionally low net charge-offs, and we remain optimistic on U.S. economic growth.”

The assertion comes after loan growth languished during the pandemic due to the government’s stimulus package that helped the market navigate the crisis.

Outlook

According to CNBC, analysts expect to see the positive effect of the Q4 rebound in JPMorgan’s results. The demand from corporations and credit card borrowers, and the Federal Reserve’s anticipated rate hikes, are expected to drive the business’ profitability.

Daniel Pinto, JPMorgan chief operating officer, had anticipated a 10% plunge in fourth-quarter trading revenue during a conference last month. He said this would be propelled by a fall in fixed income activity from all-time highs —”offsetting that is an expected 35% jump in investment banking fees.”

In December, the firm was hit with $200 million in fines after admitting to WhatsApp-related book-keeping failures in recent times. The Securities and Exchange Commission (SEC) informed of a $125 settlement, while the Commodity Futures Trading Commission said the bank had been fined $75 million for tolerating unapproved communications for more than six years.

“Shares of JPMorgan have climbed 6.2% this year, lagging the 11.6% rise of the KBW Bank Index,” CNBC reports.

Updated on

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