JPMorgan Profits Soar as First Big Bank to Release Earnings in 2016

By Katie Murar

JPMorgan Chase & Co. took to Twitter early Thursday morning to report better-than-expected results, with expense cuts making up for slow revenue growth.

In the fourth quarter, New York-based JPMorgan posted net income of $5.43 billion, or $1.32 per diluted share, up 10 percent from $4.93 billion, or $1.19 per share in the year-ago quarter.

Chart by Katie Murar. JPMorgan's net income over the past year.
JPMorgan’s net income over the past year. (Katie Murar/MEDILL)

Revenues barely budged from the year-ago quarter, increasing a mere .6 percent to $22.89 billion from $22.75 billion.

The largest U.S. bank by assets bested analysts’ expectations of $1.26 EPS by 6 cents.

Chief Financial Officer Marianne Lake said on a conference call that the year was “challenging,” but did not speculate on upcoming months.

“In the quarter we continued our trend of strong balance sheet capital and expense discipline, and exceeded targets,” Lake said. “The balance sheet was down in part purposefully and a little bit because of market conditions at the year end.”

In an unprecedented move, JPMorgan released its earnings via Twitter early Thursday morning to protect the results from online hackers. It is the first of the large banks to report earnings this year.

Chairman and Chief Executive Officer James Dimon said the economy is “as good as it’s ever been,” but we can expect it to get worst before it improves.

“We’ve got a big change in the world out there with people still getting used to china slowing down,” Dimon said. “Hopefully this will all settle down and is not the beginning of something really bad.”

In a blog post, Zack’s analyst Kaylan Nandy said JPMorgan prevailed amidst a tumultuous market due to tightly controlled expenses.

“A setback in trading activity and a not-so-impressive equities business were largely expected to act as headwinds for banks this time around and JPMorgan’s results are a reflection of that,” Nandy wrote. “However, keeping core expenses at check remained the key strength that helped the bank to brave the palpable weakness to a great extent.”

JPMorgan’s net interest income was $11.23 billion, up from $11.06 billion. Non-interest revenue was $11.66 billion, compared with $11.68 billion.

The bank’s provision for credit losses saw a dramatic increase in the fourth quarter, jumping to $1.25 billion from $840 million in the year-ago quarter.

“Relative to consensus, higher than expected revenues compensated for an increase in its loan loss provision,” Jason Goldberg, an analyst for Barclays Inc., said in a statement. “The company characterized the quarter as ‘good’ with strong loan growth and credit quality, except for some stress in energy, while it acknowledged the markets were somewhat ‘quieter’.”

Goldberg gives JPMorgan an “overweight” rating, consistent with other analysts’ positive recommendations.

JPMorgan reported for the full year 2015 net income of $24.44 billion, or $6 per diluted share, up 12.4 percent from $21.75 billion, or $5.29 per share, in the previous year.

The company’s stock rose 1.5 percent to close at $58.20 on the New York Stock Exchange.

Photo at top: JPMorgan Chase & Co. is the first of big U.S. banks to release fourth quarter earnings. (Katie Murar/MEDILL)