JPMorgan's 4th-quarter earnings smash forecasts as trading revenues soar

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JPMorgan's 4th-quarter earnings smash forecasts as trading revenues soar
JPMorgan CEO Jamie DimonGetty Images

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  • JPMorgan reported fourth-quarter earnings on Friday.
  • The banking giant posted a 42% rise in net income, driven by its release of $2.9 billion in credit reserves.
  • CEO Jamie Dimon touted the bank's robust results and record revenues in a "challenging year."
  • Visit Business Insider's homepage for more stories.

JPMorgan reported fourth-quarter earnings on Friday that beat the consensus estimates of analysts polled by Bloomberg.

The banking titan's net income jumped 42%, largely due to its release of $2.9 billion in credit reserves. It had been building those reserves in recent quarters in anticipation of a wave of defaults sparked by the pandemic.

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"JPMorgan Chase reported strong results in the fourth quarter of 2020, concluding a challenging year where we generated record revenue, benefiting from our diversified business model and dedicated employees," CEO Jamie Dimon said in the earnings release.

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"While positive vaccine and stimulus developments contributed to these reserve releases this quarter, our credit reserves of over $30 billion continue to reflect significant near-term economic uncertainty and will allow us to withstand an economic environment far worse than the current base forecasts by most economists."

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Here are the key numbers:

  • Net income: $12.14 billion versus $8.13 billion estimated
  • Earnings per share: $3.79 versus $2.65 estimated
  • Revenue: $30.2 billion versus $28.7 billion estimated

JPMorgan's corporate and investment-banking division was the standout performer, delivering a 17% increase in net revenue as well as a 82% rise in net income to $5.3 billion, fueled by reserve releases.

The segment's higher sales reflected a 37% jump in investment-banking revenues due to higher fees, as well as a 20% increase in trading revenues. That was fueled by a 15% rise in revenues to $4 billion in the fixed-income division, and the equity division's revenues surging 32% to $2 billion.

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JPMorgan's commercial-banking business also outperformed with a 115% increase in net income to $2 billion, largely due to $1.2 billion in reserve releases.

Net revenues jumped 10% in the asset-and-wealth management division due to larger performance and management fees. However, higher expenses and a negligible benefit from reserve releases meant net income slid 2% there.

Meanwhile, the Wall Street heavyweight's consumer-and-community banking division posted an 8% drop in net revenue to $12.7 billion, reflecting lower margins on deposits.

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