Jamie Dimon, CEO of JP Morgan Chase, will appear in CNBC’s Squawk Box on January 22nd, 2020 at the 2020 World Economic Forum in Davos, Switzerland.
Adam Galica | CNBC
JPMorgan Chase beat analysts’ estimates for fourth quarter earnings on better-than-expected trading results and a boost from releasing funds previously earmarked for credit losses.
The company posted earnings of $ 3.79 per share, beating Refinitiv’s poll of $ 2.62 per share. Even without the increase in loan reserves by 72 cents per share, the bank would have exceeded the estimates. The company had sales of $ 30.16 billion, beating the estimate of $ 28.7 billion.
Jamie Dimon, CEO of JPMorgan, cited the two main developments that occurred in late 2020 – news of effective coronavirus vaccines and another round of government incentives – as reasons for running down his bank’s reserves. The company announced that it had released $ 2.9 billion from its stack of cash earmarked for expected loan defaults in the quarter, increasing earnings by $ 1.9 billion from approximately $ 1 billion. Dollar in depreciation.
“While positive vaccine and stimulus developments this quarter have contributed to these reserve releases, our credit reserves of over $ 30 billion continue to reflect significant economic uncertainties in the near term and will enable us to withstand an economic environment far worse than current Baseline forecasts of most economists, “Dimon said in a statement.
Dimon added that he did not view the $ 2.9 billion reserve release as part of the bank’s core operating income, but rather the result of calculations that “now include several multi-year hypothetical probabilistic scenarios that may or may not occur “and this could bring quarter to quarter volatility.
A bright spot for Wall Street in 2020 was trading, which is expected to be the best year in terms of total revenue since the financial crisis thanks to unprecedented moves by the Federal Reserve to support markets. Investment bankers also benefited from the fact that wide open markets brought with them increased demand for IPOs and a record rate of debt issuance.
Last month, Dimon expected trade and investment banking revenue to be 20% higher in the fourth quarter than a year earlier.
Analysts might ask Dimon about succession planning after a health crisis he had last year. Although it was widely reported that Dimon had heart surgery in March last year, he recently told the Wall Street Journal that his condition was so precarious that he thought he “couldn’t make it”.
Analysts will also be excited to see how quickly the bank expects share buybacks. JPMorgan announced a $ 30 billion share buyback program last month after the Federal Reserve announced that the industry could resume buybacks in the first quarter.
JPMorgan stocks were down 8.7% over the past year, compared with the KBW Bank Index’s 4.3% decline.
Here are the numbers:
- Earnings: $ 3.79 per share versus $ 2.62 per share, according to Refinitiv.
- Revenue: $ 30.16 billion versus $ 28.70 billion according to Refinitiv.
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