JP Morgan beat expectations in its quarterly results, reporting increases in both income and revenue as higher interest rates continued to benefit the Wall Street giant.
In the three months to December 31, JP Morgan reported net income of $11.0bn (£9.0bn), up from $10.4bn in the same period last year.
The bank’s earnings per share was $3.57, up from $3.33 last year and easily beating consensus estimates of $3.09.
Its revenue rose to $35.6bn, up 17 per cent from $30.4bn last year and beating consensus estimates of $34.3bn. This was boosted by a 48 per cent increase in net interest income to $20.8bn which offset an increase in the bank’s loss provision, which was $2.3bn from a release of $1.3bn last year.
CEO Jamie Dimon praised the bank’s “fortress balance sheet”.
He said the “robust earnings” alongside the execution of its capital strategy allowed the bank to exceed its CET1 capital requirement a quarter earlier than expected. This will allow the bank to resume stock buybacks this quarter “as we deem appropriate”.
“The U.S. economy currently remains strong with consumers still spending excess cash and businesses healthy,” he said.
Shares down despite earnings up
Despite the strong performance, shares in JP Morgan were trading 2.2 per cent lower in pre-open trading.
As expected, JP Morgan’s Corporate and Investment Banking division performed poorly. Net income in the division was down 27 per cent to $3.3bn from $4.5bn last year reflecting lower fees.
Its Consumer and Community Banking division, which Dimon described as an area of “strategic focus”, performed strongly with the continued interest rate tailwind.
Net income in the division rose 10 per cent to $4.5bn from $4.3bn last year despite provision for credit losses worth $1.9bn, as opposed to a $1.1bn release last year. This was primarily because revenue in the Banking & Wealth Management section increased to $9.6bn from $6.2bn last year.
Looking forward, JP Morgan said it expects net interest income of around $73bn for 2023. Total net interest income for this year was $67.1bn.
UBS analyst Erika Najarian pointed out that the net interest income outlook is below consensus and is “disappointing in light of 4Q23 NII of $20.3bn, a significant beat to consensus of $19.1bn.” She said the outlook “will weigh on the stock today”.