JPMorgan earnings beat estimates on boost from investment banking

By Anirban Sen and Matt Scuffham

Jan 14 (Reuters) – JPMorgan Chase & Co reported a 14% drop in fourth-quarter profit on Friday but beat analysts’ estimates, helped by a stellar performance at its investment banking unit that offset a lag in its brokerage unit.

The nation’s largest lender, whose fortunes are often seen as a barometer of the health of the US economy, posted a profit of $10.4 billion, or $3.33 per share, in the quarter ended June 31. December, compared with profit of $12.1 billion, or $3.79 per share, in the same period a year earlier.

Analysts on average had expected earnings of $3.01 per share, according to Refinitiv.

JPMorgan also reported a 28% jump in investment banking revenue, while brokerage revenue fell 13%.

Revenue was almost flat at $30.3 billion. The bank’s profit was also boosted by the release of reserves of $1.8 billion.

During the quarter, JPMorgan withdrew more funds than it had set aside during the height of the pandemic in anticipation of an expected wave of loan defaults.

But that didn’t happen, thanks to consumer-friendly monetary policy and government stimulus checks that boosted consumer spending, allowing banks to release billions from their loan loss reserve.

Large US lenders have benefited from higher consumer spending, while their brokerage affiliates benefited from exceptional volatility in financial markets last year.

However, soaring inflation and a possible economic slowdown induced by the omicron variant of the coronavirus could hamper earnings growth in the coming months.

Other big US banks including Citigroup and Wells Fargo also report their results on Friday. Goldman Sachs, Wall Street’s top investment bank, will report earnings on Tuesday, while Morgan Stanley and Bank of America complete earnings season on Wednesday.

(Reporting by Anirban Sen in Bangalore and Matt Scuffham in New York. Editing in Spanish by Marion Giraldo)