JPM Stock Declines on Higher Spending; Q4 Results Above Expectations

JPM Stock


Premarket trade on Friday showed a 2.2% drop in JPMorgan Chase (NYSE:JPM) stock due to the bank’s expectations of increasing spending in 2023 compared to the previous year. Nonetheless, the company’s fourth-quarter profits were above expectations thanks to its Consumer Banking and Commercial Banking units, which more than made up for the weakness of Corporate & Investment Banking. As a result, JPM stock declined. 

JPM stock has been able to restart its repurchase this quarter because of “strong earnings generation” and “the implementation of our capital plan,” as Chairman and CEO Jamie Dimon put it.

Compared to the actual non-interest expenditure of $76.1B in FY2022, the adjusted noninterest expense guidance for FY2023 is $81B.

Depending on market conditions, the bank anticipates an FY2023 overall net interest income of $73B, with a net interest income of $74B if Markets are excluded. An estimated $74.7B in revenue.

From $3.12 in Q3 and $3.03 in Q4 2021, adjusted EPS of $3.56 in Q4 is above the $3.10 expectation. The corrected number for Q4 2022 takes out a $0.23 gain from the sale of Visa B shares and a $0.22 loss on net investment securities in Corporate.

Amounts spent on things other than interest in the fourth quarter averaged $19.0 billion, up from $17.9 billion a year earlier.

The company’s provision for credit losses of $2.29B was higher than the $2.19B, up from $1.54B in the previous quarter and reversing from a gain of $1.29B in the year-ago period.

Compared to the $19.1B predicted, $17.5B in Q3, and $13.6B in Q4 2021, net interest income in Q4 2019 totaled $20.3 B.

Total noninterest income in Q4 was $14.4B, down from the previous quarter’s $15.2B and the year 2021’s Q4’s $15.7 B.

Compared to the previous quarter’s 18% and the prior year’s 19%, this quarter’s 20% return on tangible common equity represented a significant improvement.

Total deposits at JPMorgan Chase (JPM) were $2.34T on 12/31/2022, down from $2.41T on 9/30/2022, while total loans were $1.14T on 12/31/2022.

Profit and loss by division during the fourth quarter:

  • Revenue from Consumer & Community Banking was $15.8B, up from $14.3B in the previous quarter and $12.3B in the year-ago quarter. Net income of $4.54B was up from Q3’s $4.33B and Q4’s $4.15B.
  • Total revenue from Corporate & Investment Banking was $10.5B, down 11% Q/Q and 9% Y/Y, while net income was down from $3.33B, down 6% Q/Q and 27% Y/Y.
  • Earnings in Commercial Banking were $1.42B, up 50% from Q3 and 15% from Q4 2021. Revenue in Commercial Banking increased by $340M (12% Q/Q, 30% Y/Y).
  • Asset & Wealth Management Revenue was $4.59B, up 1% Q/Q and 3% Y/Y, while net income was $1.13B, down 7% Q/Q but up 1% Y/Y.

The meeting will begin at 8:30 a.m. EST.

Non-GAAP earnings per share of $3.56 and sales of $34.5B for JPMorgan Chase were both previously reported to be better than expected by $0.46 and $270M, respectively.

Featured Image: Megapixl @ Goldenhind

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About the author: I'm a financial journalist with more than 1.5 years of experience. I have worked for different financial companies and covered stocks listed on ASX, NYSE, NASDAQ, etc. I have a degree in marketing from Bahria University Islamabad Campus (BUIC), Pakistan.