Investment Banking

JPMorgan Posts Record Annual Earnings

The U.S. economy "still looks OK," according to CEO Jamie Dimon.
Katie Kuehner-HebertJanuary 14, 2016

JPMorgan Chase on Thursday posted a record $24.44 billion in earnings for 2015, but fourth-quarter results for individual business lines were mixed.

The New York City-based company’s net income for the year was $24.44 billion, exceeding the previous record income of $21.76 billion for 2014. For the fourth quarter, earnings rose 10% to $5.43 billion, or $1.32 a share, on cost-cutting and higher earnings within the lender’s investment banking division. Analysts polled by Thomson Reuters had expected earnings of $1.25 a share. Revenue rose slightly to $23.75 billion and also beat expectations.

In an effort to reduce its capital requirements as a “too big too fail” financial services company, JPMorgan’s reduced its total assets by 3% to $2.35 trillion between the end of September and the end of December. The company expects to face a lower capital surcharge partially as a result.

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“The balance sheet was down in part purposefully and a little bit because of market conditions at the year end,” CFO Marianne Lake said on the company’s earnings conference call, The Wall Street Journal reported. Lake added that the balance sheet could grow as the bank aims to boost overall deposits and loans.

The company’s business lines experienced mixed results for the fourth quarter. Overall profit at JPMorgan’s corporate and investment bank rose 80% to $1.75 billion, from $972 million in the same period last year. But its commerical banking unit earned $550 million, a 21% decrease from the $693 million it earned in the year-ago quarter, and J.P. Morgan’s asset management unit reported profit of $507 million, down from $540 million in the fourth quarter of 2014.

Expenses fell about 7%, to $14.26 billion in the quarter, as the company continues its cost-cutting measures. Its loan-loss provision was $1.25 billion, including $124 million for its energy portfolio and $35 million for its metals and mining portfolio. That compares with $840 million in the fourth quarter of 2014 and $682 million in the third quarter of 2015. The company lost $1.06 billion to loan defaults, or 0.52% of its overall portfolio, compared with a 0.65% charge-off rate in the third quarter.

JPMorgan’s shares rose 2.1% in premarket. The price hit an all-time record above $70 in July but have fallen 19% since then, according to the WSJ. Since the beginning of 2016, the bank’s share are down 13% compared with an 11% decrease in the KBW Nasdaq index of bank stocks.