JPMorgan Chase's earnings drop due to $2.9B regional bank rescue fee

JPMorgan Chase announced a decline in fourth-quarter profits on Friday, attributing it to a $2.9 billion fee linked to government interventions in failed regional banks in the previous year. Here's a breakdown of the reported figures compared to analysts' expectations from LSEG (formerly Refinitiv):

• Earnings per share: $3.04, falling short of the expected $3.32.
• Revenue: $39.94 billion, slightly surpassing the anticipated $39.78 billion.

The bank reported a 15% drop in quarterly earnings to $9.31 billion, or $3.04 per share, from the previous year. JPMorgan clarified that excluding the fee related to the regional banking crisis and $743 million in investment losses, earnings would have stood at $3.97 per share.

Despite the challenges, revenue saw a 12% increase to $39.94 billion, surpassing analysts' predictions. CEO Jamie Dimon highlighted the bank's record full-year results, emphasizing better-than-expected performance in net interest income and credit quality. JPMorgan reported nearly $50 billion in profit for 2023, with $4.1 billion attributed to First Republic, an acquisition made during the regional banking turmoil.

Similar to its resilience during the 2008 financial crisis, JPMorgan emerged more substantial and profitable from last year's regional banking challenges. The bank's shares rose by 1.9% during premarket trading.

Dimon, while optimistic about the U.S. economy's resilience, expressed caution due to potential inflationary pressures and higher-than-expected interest rates resulting from deficit spending and supply chain adjustments. He highlighted risks such as central banks withdrawing support programs and geopolitical tensions in Ukraine and the Middle East.

Addressing industry challenges, Dimon acknowledged the bank's adept navigation of rate changes since the Federal Reserve began raising rates in early 2022. However, concerns linger over profit squeezes for smaller peers, driven by increased deposit costs and unrealized losses on bonds as yields rise.

Analysts are keen on insights into net interest income, loan losses, and banks' strategies to manage upcoming increases in capital requirements. JPMorgan's shares, which rallied 27% the previous year, outperformed its peers, reflecting confidence in the bank's ability to navigate market dynamics.

The story is developing, and updates will be provided. Stay tuned for more.

SOURCE: CNBC

IMAGE: YOUTUBE