JPMorgan beats fourth-quarter profit guidance on M&A charges and earnings release

Updated at 7:20 a.m. EST

JPMorgan Chase (JPM) – Get the JPMorgan Chase & Co. report. released stronger-than-expected fourth-quarter results on Friday, thanks in part to solid gains in investment banking fees and the release of reserves set aside during the peak of the Covid pandemic.

JPMorgan said earnings for the three months ending December were pegged at $10.4 billion, or $3.33 per share, down 12.1% from the same period last year, but well ahead of the Street consensus forecast of $3.01 per share. Stripping out earnings from a $1.8 reserve release, along with other one-time items, JPMorgan’s first-quarter earnings were $2.86 per share.

Managed revenue, JPMorgan said, was essentially flat from a year ago at $30.3 billion, just ahead of analysts’ estimates of a total of $29.9 billion, while net income from interest rose 3% to $13.7 billion. Investment banking revenue rose 28% to $3.2 billion, JPMorgan said, while capital markets and securities trading revenue fell 13% to $6.3 billion.

Looking to the year ahead, the nation’s largest bank said net interest income, a key measure of profitability, was around $50 billion, down from the tally of 2021 of around $52.5 billion and well below Street’s forecast.

“The economy continues to do well despite headwinds from the Omicron variant, inflation and supply chain bottlenecks,” CEO Jamie Dimon said. “Credit continues to be healthy with exceptionally low net charges, and we remain optimistic about U.S. economic growth as the business climate is upbeat and consumers benefit from job and wage growth.”

“IB’s overall fees were up 37%, driven by both Corporate and Investment Banking and Commercial Banking, due to unprecedented M&A activity, a active acquisition financing and strong performance in IPOs,” he added. “Markets revenue was down 11% from a record fourth quarter last year, but up 7% from the 2019 quarter on strong equity performance.”

JPMorgan shares fell 3.3% in premarket trading immediately after the earnings release to point to an opening price of $162.73 apiece.

Global merger deals topped $5 trillion for the first time this year, an all-time high fueled in part by SPAC deals, cheap capital and major corporate restructurings.

Dealogic, which compiles mergers and acquisitions data, said global deal value rose 63% from a year ago to $5.63 trillion, a new all-time high that eclipsed the record. of 2007 of $4.42 trillion.

Plans unveiled by General Electric (GE) – Get the General Electric company report and Johnson & Johnson JNJ to spin off their companies played a big role in this year’s record total, as did the surge in deals struck with the so-called Special Purpose Acquisition Companies, or SPACs, led by the merger of 4, $5 billion from Singapore-based Grab earlier this month.

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