Banking & Finance

Is JPMorgan in Trouble After Its Q4 Report?

Chris Lange

JPMorgan Chase & Co. (NYSE: JPM) released its fourth-quarter financial results before the markets opened on Tuesday. The megabank said that it had $1.98 in earnings per share (EPS) and $26.8 billion in revenue, which compares with consensus estimates of $2.25 in EPS and $27.28 billion in revenue. The same period of last year reportedly had EPS of$1.76 on $25.45 billion in revenue.

One highlight from the report was that the provision for credit losses was $1.5 billion, an increase of 18%, or $240 million, from the prior year. Analysts were calling for $1.3 billion. The bank noted it was preparing for rising losses in retail credit cards and commercial and industrial loans.

In terms of its segments, JPMorgan reported as follows:

  • Consumer & Community Banking net revenues increased 13% year over year to $13.695 billion.
  • Corporate & Investment Bank net revenues decreased 4% to $7.237 billion.
  • Commercial Banking net revenues decreased 2% to $2.306 billion.
  • Asset & Wealth Management net revenues decreased 5% to $3.439 billion.
  • Corporate net revenues decreased 27% to $127 million.

Book value per share increased 5% year over year to $70.35, while tangible book value per share was up 5% to $56.33. The Basel III common equity Tier 1 capital ratio was 12.0% for the quarter.

Jamie Dimon, board chair and chief executive, commented on the financial results:

2018 was another strong year for JPMorgan Chase, with the Firm generating record revenue and net income, even without the impact of tax reform. Each line of business grew revenue and net income for the year, while continuing to make significant investments in products, people and technology, demonstrating the power of the platform. We grew core loans 7%, in-line with our expectations, while maintaining credit discipline and a fortress balance sheet with significant capital and liquidity.

Shares of JPMorgan closed Monday at $100.94, in a 52-week range of $91.11 to $119.33. The consensus analyst price target is $115.88. Following the announcement, the stock was down nearly 3% at $98.19 in early trading indications Tuesday.