JPMorgan Chase & Co (NYSE:JPM) has reported fourth-quarter revenue and earnings that beat expectations thanks to a strong performance at its trading unit. However, CEO Jamie Dimon warned of several risks to the US economy, sending the bank’s shares lower in early New York trade.
The bank reported revenue of $34.5 billion and managed revenue of $35.6 billion for the three months to December 31, 2022, including a $914 million gain on the sale of Visa B shares and $874 million of net investment securities losses.
Net income topped $11 billion for the quarter, 5.9% up from a year earlier, resulting in earnings of $3.57 per share, a 7.2% improvement from 4Q 2021 and above Wall Street analysts’ $3.07 estimate, according to Refinitiv.
“Our lines of business performed well in the quarter, and we continued to see momentum in our areas of strategic focus,” Dimon said in a statement. “This robust earnings generation combined with the execution of our capital strategy allowed us to exceed our CET1 (Common Equity Tier 1) target of 13% one quarter early, and we have the ability to resume stock buybacks this quarter, as we deem appropriate.”
The bank posted a $2.3 billion provision for credit losses, reflecting a net reserve build of $1.4 billion and net charge-offs of $887 million. It said the net reserve build was driven by a modest deterioration in its macroeconomic outlook, which now reflects a mild recession as the ‘central case’.
“The US economy currently remains strong with consumers still spending excess cash and businesses healthy,” Dimon said. “However, 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.”
“We remain vigilant and are prepared for whatever happens, so we can serve our customers, clients and communities around the world across a broad range of economic environments,” Dimon added.
JPMorgan’s shares were down 1.2% at $137.90 by 10am ET.
Contact the author at stephen.gunnion@proactiveinvestors.com