JPMorgan Posts Record $12.1 Billion Profit–Shattering Expectations Despite Pandemic Highs

Topline

JPMorgan Chase, the nation’s largest bank by assets, kicked off earnings season Friday morning with results that shattered Wall Street expectations–and fourth-quarter net income that was nearly 50% higher than it was in 2019.

Key Facts

New York-based JPMorgan Chase reported revenue of $29.2 billion in the fourth quarter, higher than the $28.3 billion reported in the same period last year and even better than average analyst projections of $28.3 billion.

Net income, meanwhile, soared to $12.1 billion, or $3.79 per share, up an eye-popping 42% year over year and similarly beating average Wall Street estimates calling for earnings of $2.62 per share.

Much of the firm’s profit gains were due to the release of $2.9 billion in cash reserves (or vaulted money kept on hand to meet Federal Reserve requirements), representing heightened optimism over positive vaccine and stimulus developments–but even without the reserve releases, the firm still would’ve beaten profit expectations by a margin of 17%.

JPMorgan stock futures ticked down 0.5% within minutes of the announcement; shares closed up 0.6% on Thursday, finally recouping all their pandemic losses to hit a new all-time high.

Stock futures were negative Friday morning after the announcement, with the S&P falling 0.3% and the Dow Jones Industrial Average shedding 128 points, or 0.4%.

The financials industry was one of the hardest-hit sectors during the pandemic, but it’s risen in the weeks since Election Day as investors look to an economic recovery that bolsters spending; the S&P 500 Financials Index is up 2% over the past year, compared to a 15% gain for the broader S&P 500.

Crucial Quote

“JPMorgan Chase reported strong results in the fourth quarter of 2020, concluding a challenging year where we generated record revenue,” the firm’s billionaire chairman and CEO, Jamie Dimon, said in a statement released alongside earnings, before warning of the still-precarious economic state. “Our credit reserves of over $30 billion continue to reflect significant near-term economic uncertainty and will allow us to withstand an economic environment far worse than the current base forecasts by most economists.”

Surprising Fact

In 2019, JPMorgan posted the biggest annual profit in U.S. banking history, nabbing $36.4 billion. Despite taking a hit from the pandemic in earlier quarters, the firm still managed to pull in $29.1 billion in income last year.

Further Reading

Fed Chair Powell Warns Of ‘Exuberant’ Spending And Price Spikes After Pandemic But Isn’t Worried About Long-Term Inflation (Forbes)

Dow Jumps 100 Points And BlackRock, Delta Beat Profit Expectations Amid Worsening Jobs Data (Forbes)

Markets Fret Over Sanders’ Role As Head Of Budget Committee, Stocks Flat As Investors Brush Off Impeachment Plans (Forbes)

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