Investment banking helps drive JPMorgan to record annual profits

JPMorgan Chase reported net income for the last three months of 2021 ahead of analysts’ expectations, pushing the US banking giant to record full-year profits.

In fourth-quarter earnings on Friday, the largest US lender said net income was $10.4bn, or $3.33 per share. This was down from $12.1bn, or $3.79 per share, in the same period last year, but still ahead of analysts’ average forecast of $9.36bn, or $2.99 per share, according to consensus data compiled by Bloomberg.

Overall for 2021, net profit came in at a record $48.3bn, bolstered by its largest-ever haul of investment banking fees and far lower losses on loans during the pandemic than the bank had anticipated.

Jamie Dimon, JPMorgan chief executive, struck an upbeat tone for the year ahead.

“The economy continues to do quite well despite headwinds related to the Omicron variant, inflation and supply chain bottlenecks,” Dimon said in a statement.

“Credit continues to be healthy with exceptionally low net charge-offs, and we remain optimistic on US economic growth as business sentiment is upbeat and consumers are benefiting from job and wage growth.”

JPMorgan reported managed revenues of $30.3bn for the fourth quarter, up slightly from $30.16bn a year earlier and roughly in line with analysts’ forecast for $30bn.

Fourth-quarter investment banking revenue was up 28 per cent at $3.2bn, compared to analysts’ estimates for $3.1bn, amid a global boom in dealmaking activity.

Revenue in JPMorgan’s trading division, which had a bumper year in 2020 due to heavy volume during market swings, was down 11 per cent at $5.3bn, but still above pre-pandemic levels. Analysts had forecast revenue to be $5.36bn. 

Earnings for 2021 and the quarter were flattered by releases of reserves JPMorgan and other banks had set aside to cover potential losses from loans which they feared could turn sour due to the pandemic.

In the fourth quarter, JPMorgan said it had released a further $1.8bn in credit reserves. Adjusted for that, net income was $9bn.

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