Banking, finance, and taxes

How JPMorgan Solidified Its Position With Q4 Earnings

Chris Lange

Published: January 13, 2017 9:45 am

Last Updated: January 12, 2020 3:53 pm

The U.S. economy is building momentum and a large part of this has been the financial sector. One megabank has not only contributed to the rally but will be well positioned to take advantage of the new administration’s policy decisions and the overall market sentiment going forward. In fact, this megabank solidified its position after it reported earnings Friday morning.

This past year, JPMorgan Chase & Co. (NYSE: JPM) demonstrated the strength and depth of its platform with record net income and EPS in an increasingly complex global environment. It grew market share in practically all of its businesses and showed expense discipline while continuing to invest for the future.

Although the initial move we are seeing in the stock is not significant, it might be a fair assumption that these earnings were already priced in with the rally. In a sense JPMorgan, solidified its position following the Trump rally.

JPMorgan reported its fourth-quarter financial results before the markets opened on Friday. The company said that it had $1.71 in earnings per share (EPS) and $24.3 billion in revenue. Thomson Reuters consensus estimates had called for EPS of $1.44 and $23.95 billion in revenue. The same period of last year reportedly had $1.32 in EPS and revenue of $23.75 billion.

Revenues consisted of net interest income that was $12.1 billion, up 5%, primarily driven by loan growth and the net impact of higher rates, partially offset by lower investment securities balances. Noninterest revenue contributed $12.3 billion to revenue as well.

The provision for credit losses was $864 million, down from $1.3 billion, due to net reserve releases in the current quarter of roughly $400 million across Consumer and Wholesale, versus reserve increases from last year.

Average core loans grew 14% in the fourth quarter, while deposits were up 11% when compared to last year’s fourth quarter numbers.

A few of the other key highlights in the report were:

• Book value per share totaled $64.06, up 6% from last year, while tangible book value per share was $51.44, posting a 7% gain.
• The Basel III common equity Tier 1 capital was $182 billion with a ratio of 12.2%.
• 26.5 million active mobile customers, up 16% year over year.

During this quarter, JPMorgan returned $3.8 billion to shareholders, with $2.1 billion of net share repurchases and a common dividend of $0.48 per share.

Jamie Dimon, chairman and CEO, commented:

Our results this quarter were a strong end to another record year, reflecting our intense client focus and solid performance across our businesses. In the Consumer business, we had double digit growth in deposits and core loan balances, our credit card sales volume was a record, and for the year we had over $1 trillion of merchant processing volume. We saw continued momentum from the third quarter in CIB with strong Markets results across products. Asset Management and Commercial Banking both grew loans and deposits nicely in a competitive environment.

Shares of JPMorgan traded at $87.53 early Friday, up 1.5% and near the consensus analyst price target of $87.59. The 52-week trading range is now $52.50 to $87.77.