JP Morgan Chase (JPM) -) shares jumped to a fresh record high Friday after the world's fifth-largest bank forecast solid net interest income gains that offset a weaker-than-expected fourth-quarter report.
JP Morgan said earnings for the three months ended in December were $9.3 billion, or $3.06 a share, down 14.3% from the year-earlier period and well shy of the Wall Street consensus forecast of $3.32 per share.
'Special Assessment' hurts JP Morgan profit
JP Morgan's $3 billion 'Special Assessment' payout to the Federal Deposit Insurance Corporation, tied to the spring rescue of several regional banks, however, trimmed 74 cents from its overall bottom line, which would have otherwise topped Wall Street forecasts.
Reported revenue, JPMorgan said, rose 8.4% to $38.57 billion, again missing analysts' estimates of a $39.78 billion tally. Managed revenue, however, were up 12.3% at $39.94 billion, topping Wall Street forecasts.
JP Morgan is the fifth largest bank in the world, with a market value of around $492 billion and around $3.2 trillion in assets under its umbrella.
Net interest income also impressed, rising 19% to a record $24.2 billion a result of the higher-interest-rate environment, offsetting a slump in global dealmaking fees amid a dearth of new listings and takeovers so far this year. The bank said it sees NII rising to just over $90 billion this year, a tally that will likely top its overall expenses target.
Merger activity slumped to the lowest levels in a decade last year, with overall volumes down 18% from 2022 levels, according to LSEG data, with around $3 trillion in deals completed. In the U.S. overall deals fell 8% to around $1.42 trillion.
Dimon: Economy resilient, geopolitics prompts caution
"The U.S. economy continues to be resilient, with consumers still spending, and markets currently expect a soft landing. It is important to note that the economy is being fueled by large amounts of government deficit spending and past stimulus," said CEO Jamie Dimon.
"There is also an ongoing need for increased spending due to the green economy, the restructuring of global supply chains, higher military spending and rising health care costs," he added. "This may lead inflation to be stickier and rates to be higher than markets expect," he added.
"And the ongoing wars in Ukraine and the Middle East have the potential to disrupt energy and food markets, migration, and military and economic relationships, in addition to their dreadful human cost," Dimon said. "These significant and somewhat unprecedented forces cause us to remain cautious."
Dimon, who has led the bank since 2006, is one of the most respected men in global finance and was once considered as a possible Democratic candidate for president.
JP Morgan shares were marked 0.33% lower in midday Friday trading following the earnings release to change hands at $169.70 each. The shares hit a fresh record of $176.31 earlier in the session.
"A soft landing for the U.S. economy bodes well for loan growth, which offsets lower rates for net interest income," said CFRA analyst Kenneth Leon, who carries a 'buy' rating on JPMorgan stock with a $190 price target.
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