JPMorgan Chase reported fourth-quartet 2022 net income of $11 bln. Bank now expects a mild recession due to modest deterioration in macroeconomic outlook

Autor: Financial Market
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JP Morgan Chase, the largest US bank in terms of assets reported today financial results for the fourth quarter 2022 that were above analysts’ expectations. Q4 Net income was $11.0 billion, up 6% yoy while whole year came at $37.7 bln.

Net revenue was $35.6 billion, up 17% and Net interest income (NII) was $20.3 billion, up 48%. Excluding Markets, Net interest income was $20.0 billion, up 72%, driven by higher rates.

Noninterest revenue was $15.3 billion, down 8%, largely driven by lower Investment Banking fees, management and performance fees, operating lease income in Auto and net production revenue in Home Lending, largely offset by higher Corporate & Investment Banking Markets revenue.

Noninterest expense was $19.0 billion, up 6%, driven by higher structural expense, primarily compensation, and continued investments in the business, including technology and marketing, partially offset by lower legal expense.

The provision for credit losses was $2.3 billion, reflecting a net reserve build of $1.4 billion and net charge-offs of $887 million.

The net reserve build in the current quarter included $1.0 billion in Consumer and $343 million in Wholesale, driven by a modest deterioration in the Firm’s macroeconomic outlook, now reflecting a mild recession in the central case, as well as loan growth in Card Services, partially offset by a reduction in uncertainty as the effects of the pandemic gradually recede.

Net charge-offs of $887 million were up $337 million, largely driven by Card Services. The prior year net benefit of $1.3 billion reflected a reserve release of $1.8 billion and $550 million of net charge-offs.

JPMorgan Chase reported strong results in the fourth quarter as we earned $11.0 billion in net income, $34.5 billion in revenue and an ROTCE of 20%, while maintaining a fortress balance sheet and making all necessary investments.

This robust earnings generation combined with the execution of our capital strategy allowed us to exceed our CET1 target of 13% one quarter early, and we have the ability to resume stock buybacks this quarter, as we deem appropriate,” added Jamie Dimon, CEO.

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All business lines performed well in the quarter, continuing to see momentum in all areas of strategic focus.

In Consumer & Community Banking, debit and credit card sales were up 9%, while card loans were up 19% with total revolving balances now back to pre-pandemic levels.

In the Corporate & Investment Bank, Markets revenue rose 7% as client activity remained strong in Fixed Income. Global Investment Banking fees were down significantly in a challenging environment, although bank maintained our #1 ranking in 2022.

Commercial Banking loans were up 14% on new loan originations and higher revolver utilization. And in Asset & Wealth Management, revenue increased 3% as higher net interest income more than offset the impact of lower market levels.”

The U.S. economy currently remains strong with consumers still spending excess cash and businesses healthy. However, we still do not know the ultimate effect of the headwinds coming from geopolitical tensions including the war in Ukraine, the vulnerable state of energy and food supplies, persistent inflation that is eroding purchasing power and has pushed interest rates higher, and the unprecedented quantitative tightening.

We remain vigilant and are prepared for whatever happens, so we can serve our customers, clients and communities around the world across a broad range of economic environments,” Dimon concluded.