JPMorgan Chase posts record FY profits despite slip in Q4

US banking giant JPMorgan Chase posted record full-year profits on Friday despite revealing fourth-quarter earnings had come in lower year-on-year as a weaker performance in its trading unit somewhat offset a boom in its investment banking division.

JPMorgan Chase reported a fourth-quarter profit of $10.4bn, or $3.33 on a per share basis, in the three months ended 31 December, down from the $12.1bn, or $3.79 per share, turned in at the same time a year ago.

However, despite the mixed quarterly performance for JPM, for 2021 as a whole, net profits came in at an all-time high of $48.3bn, boosted by the firm's best investment banking fee performance on record and markedly lower losses on loans amid the Covid-19 pandemic than originally anticipated.

Fourth-quarter revenues came to $29.25bn for the quarter, broadly flat year-on-year when compared to 2020's $29.33bn figure. Investment banking revenue for the period was up 28% at $3.2bn, ahead of analysts’ estimates for $3.1bn, amid a global boom in dealmaking activity, while revenues in JPMorgan's trading division was down 11% at $5.3bn.

Net interest income in Q4 was $13.7bn, up 3%, driven by balance sheet growth but this was partially offset by lower net interest income in CIB markets. Non-interest revenue was $16.6bn, again down 1% due to lower revenue in CIB markets and home lending but this was predominantly offset by higher investment banking fees.

JPM's provision for credit losses in the quarter led to a net benefit of $1.3bn, reflecting a net reserve release of $1.8bn, driven by "a more balanced outlook" due to continued resilience in the macroeconomic environment and $550.0m of net charge-offs. Average loans increased 6% and average deposits shot up 17%.

Chief executive Jamie Dimon said: "JPMorgan Chase reported solid results across our businesses benefiting from elevated capital markets activity and a pick up in lending activity as firmwide average loans were up 6%. The economy continues to do quite well despite headwinds related to the Omicron variant, inflation and supply chain bottlenecks. Credit continues to be healthy with exceptionally low net charge-offs, and we remain optimistic on US economic growth as business sentiment is upbeat and consumers are benefiting from job and wage growth."

As of 1230 GMT, JPMorgan Chase shares were down 2.51% in pre-market trading at $164.0 each