JPMorgan Chase & Co. made more money in the fourth quarter than it ever has, as it signaled more optimism about borrowers being able to repay their loans and the pandemic-fueled trading surge continued.
The biggest U.S. bank posted a jump in trading and investment-banking fees that helped its Wall Street unit close out its most profitable year ever. The bank also released loan-loss reserves for the second quarter in a row, a sign that defaults won’t take as big a toll as previously expected.
Still, the firm cautioned that uncertainty remains and that it wasn’t reducing the money set aside for credit card losses as it waits to see the impact of fiscal stimulus efforts. JPMorgan shares fell 0.67% to $140.18 at 9:52 a.m. in New York trading.
“The bridge has been strong enough -- the question that remains is, is the bridge long enough,” Chief Financial Officer Jennifer Piepszak said, referring to the impact that stimulus has had. And while the recent package is cause for optimism, there’s still a lot of uncertainty. “We have to get through the next three to six months.”
JPMorgan’s earnings suggest the clouds are starting to lift on the banking industry, and hint at what’s to come when the rest of Wall Street reports results later Friday and early next week. With vaccines raising hopes that the pandemic could ease in coming months, some analysts are predicting the industry’s profits will rebound enough in 2021 to undo last year’s dive.
While the bank’s leaders said that risks remain, they aren’t slowing down on investments for growth. JPMorgan boosted its spending on new projects by about 24% to $12.4 billion, prompting several questions from analysts about increasing expenses while the virus rages. The bank is planning to hire more bankers, expand its consumer and commercial businesses into new markets and spend more on technology.
The bank said it could repurchase as much as $4.5 billion of shares this quarter after the Fed lifted an industry ban on stock buybacks, but Chief Executive Officer Jamie Dimon has long said he’d rather funnel excess capital toward improving the firm.
“I would love to spend more on investments,” Dimon said on a call with analysts Friday. “It’d be the best and highest possible use of our capital.”
Record Haul
The fourth-quarter haul lifted JPMorgan’s annual profit to $29 billion in a year that saw unprecedented surges in unemployment and economic disruptions tied to pandemic lockdowns. That was more than any other major U.S. bank has earned in any year.
The firm’s Wall Street unit generated the most profit and revenue it ever has in a fourth quarter, capping off a record year for the business that has helped prop up a consumer-lending division dealing with business closures and swelling unemployment rolls. JPMorgan’s traders generated $5.9 billion in the last three months of the year thanks to strength in credit, currencies, emerging markets and equity derivatives trading, among other pockets.