JPMorgan Chase just set the bar high for earnings season
JPMorgan Chase (JPM 1.83% ), the largest bank in the United States by assets, has just released its fourth quarter results. The stock recently hit a new all-time high, and today’s report shows that the move was fully justified.
For starters, the bank easily beat the estimates on the top and bottom results. Earnings of $3.79 per share were about 45% above what Wall Street analysts were looking for, and revenue of $30.16 billion beat expectations by nearly $1.5 billion.
Beyond the headlines, here are some of the major highlights:
- The bank’s average loan portfolio in the fourth quarter was 1% higher than a year ago (impressive, given the pandemic), but deposits were up 35% from the same point in 2019 .
- JPMorgan Chase produced a return on equity (ROE) of 19% for the quarter, compared to 14% a year ago. The measure of profitability has certainly been helped by the releases of reserves, but it is still impressive. For the full year, the bank posted an ROE of 12% and an efficiency ratio of 54%.
- JPMorgan Chase was the world leader in investment banking fees, which rose 34% year-over-year.
- Trading revenue, which has been a very strong point throughout the pandemic, was up 20% year over year, including 32% growth in equity trading revenue.
- Assets under management in the firm’s asset and wealth management segment grew 17% year-over-year to $2.7 trillion.
- The book value of the shares has increased 8.4% over the past year to $66.11.
- Share buybacks will resume in the first quarter and the bank said it has $4.5 billion in buyback capacity for the period.
On another positive note, JPMorgan Chase released $2.9 billion in reserves it had set aside earlier in the COVID-19 pandemic. CEO Jamie Dimon specifically cited the rollout of COVID-19 vaccines and recent stimulus efforts as reasons the bank is confident enough that the $30 billion still set aside will be more than enough.
Certainly the news was not everything Well. For example, the retail banking division saw its interest margins plunge 86 basis points from a year ago. But overall it was a great quarter for JPMorgan Chase. A high bar has just been set for the rest of the banking industry this earnings season.
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