Banking & Finance

JPMorgan Found the Trading Magic Again

JPMorgan Chase & Co. (NYSE: JPM) reported fourth-quarter 2019 results before markets opened Tuesday. For the quarter, the investment bank and financial services giant reported diluted earnings per share (EPS) of $2.57 on managed (adjusted) revenue of $29.21 billion. In the same period a year ago, the big bank reported EPS of $1.98 on managed revenue of $26.8 billion. Fourth-quarter results also compare to the consensus estimates for EPS of $2.35 on revenue of $27.96 billion.

For the full fiscal year, JPMorgan reported managed revenues of $118.69 billion and diluted EPS of $10.72. In the prior year, revenues totaled $111.53 billion and EPS of $9.00. Analysts were looking for EPS of $10.48 and revenues of $116.1 billion.

In a presentation accompanying its press release, JPMorgan said it expects net interest income for the first quarter of 2020 to come in at around $14 billion. The bank also said it expects adjusted expenses for the quarter to total approximately $17 billion.

Quarterly profits rose by 8% from $8.38 billion in the third quarter of 2018 to $9.08 billion. Net interest income totaled $14.3 billion, down 2%, driven by lower interest rates largely offset by growth in the balance sheet and higher net income in the corporate and investment banking group.

Noninterest revenue reached $14.9 billion, up 21% year over year. The bank attributed the year over year increase to fixed income and equity markets, asset & wealth management, home lending, and auto.

Provision for credit losses totaled $1.43 billion, a decrease of 8% year over year and a drop of 6% sequentially.

By divisions, net income in the consumer and community banking group rose by 5% year over year to $4.23 billion, commercial banking net income fell by 9% to $938 million and asset management group net income jumped 30% to $785 million for the quarter.

Corporate and investment banking group net income soared 48% to $2.93 billion and revenues were up 31% to $9.47 billion. Markets revenue of $6.14 billion was up 55%. Provision for credit losses in the group rose to $98 million, compared to $82 million in the prior-year quarter.

Bank CEO Jamie Dimon said:

While we face a continued high level of complex geopolitical issues, global growth stabilized, albeit at a lower level, and resolution of some trade issues helped support client and market activity towards the end of the year. The U.S. consumer continues to be in a strong position and we see the benefits of this across our consumer businesses.

The bank did not offer guidance in its press release, but the consensus estimates call for first-quarter EPS of $2.66 on revenues of $29.53 billion. The EPS estimate for the 2020 fiscal year is $10.65 on revenues of $117.07 billion.

JPMorgan reported its highest ever annual profit following a huge fourth-quarter bounce in trading revenues. Fixed income trading skyrocketed by 86%, following a woeful performance in the fourth quarter of 2018.

Shares traded up by about 1.4% in Tuesday’s premarket at $139.10. The current 52-week range is $98.09 to $141.10. The consensus 12-month price target was $135.56 before results were announced.