Jamie Dimon, CEO of JPMorgan Chase, testifies during the Senate Banking, Housing, and Urban Affairs Committee hearing titled Annual Oversight of the Nations Largest Banks, in Hart Building on Thursday, September 22, 2022.
Tom Williams | CQ-Roll Call, Inc. | Getty Images
JPMorgan Chase reported fourth-quarter earnings before the opening bell Friday.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings: $3.57 per share, which does not compare with the $3.07 estimate, according to Refinitiv.
- Revenue: $35.57 billion vs. $34.3 billion
The bank posted a $2.3 billion provision for credit losses in the quarter, more than the $1.96 billion StreetAccount estimate, as it set aside money for expected defaults.
The move was driven by a “modest deterioration in the Firm’s macroeconomic outlook, now reflecting a mild recession in the central case” as well as loan growth from customers using their Chase credit cards, the bank said.
While CEO Jamie Dimon said Friday that the U.S. economy “currently remains strong” thanks to well-financed consumers and businesses, he pointed to a series of risks to that outlook.
“We still do not know the ultimate effect of the headwinds coming from geopolitical tensions including the war in Ukraine, the vulnerable state of energy and food supplies, persistent inflation that is eroding purchasing power and has pushed interest rates higher, and the unprecedented quantitative tightening,” Dimon said.
Quantitative tightening refers to central banks’ moves to shrink their balance sheets by halting or reversing previous bond-buying programs.
JPMorgan, the biggest U.S. bank by assets, is closely watched for clues on how the industry is navigating an economy at a crossroads.
Analysts are expecting a mixed bag of conflicting trends from banks. Higher rates will help lenders earn more interest income, but some of that boost will be offset by larger provisions for expected loan losses as the economy slows.
Wall Street won’t likely come to the rescue. Investment banking revenue is expected to plunge 50% in the wake of frozen IPO markets and subdued deals, Barclays analyst Jason Goldberg said in a Jan. 11 note.
That will be partly offset by a 10% rise in trading revenue, thanks to a boost from fixed income operations, he wrote.
Dimon rattled markets last year when he said an economic “hurricane” caused by the Federal Reserve was headed for the U.S.
Shares of JPMorgan have climbed 4% this year, compared with the 6% rise of the KBW Bank Index.
The other large retail banks, including Bank of America, Wells Fargo and Citigroup, are also scheduled to release results Friday, while Goldman Sachs and Morgan Stanley report Tuesday.
This story is developing. Please check back for updates.
