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JP Morgan Chase 4Q18 earnings miss expectations

JP Morgan Chase reported 4Q18 results on Tuesday (15 January), which showed that its revenue stood at $26.8bn (+4% YoY) compared with $24.5bn posted in 4Q17, while diluted EPS came in at $1.98 compared with $1.07 recorded in 4Q17. Refinitiv consensus forecasts had expected revenue of $26.67bn and earnings of $2.20/share.This was the first time JP Morgan has underperformed EPS expectations in 16 quarters. CNBC writes that the biggest shortfall appeared to come from its trading division, where fixed-income trading produced $1.86bn in revenue, compared with a $2.2bn consensus estimate. However, falling markets also impacted the bank’s asset management division and resulted in a $150mn markdown on its private equity holdings.

Its consumer and business banking revenue climbed 18% YoY to $6.57bn, although home lending revenue fell 8% YoY. Corporate and investment banking revenue came in at $7.2bn – down 4% YoY, while consumer and community banking revenue rose 13% YoY to $13.7bn, commercial banking revenue declined by 2% YoY to $2.3bn and asset and wealth management revenue of $3.4bn was down 5% YoY.

The firm said it set aside $1.55bn for credit losses, an 18% YoY increase and $250mn above consensus analysts’ $1.3bn estimate. According to JP Morgan it was “preparing for rising losses in retail credit cards” as it expanded lending there and “hits on commercial and industrial loans.”

However, the bank did note that its $7.1bn profit (a c. 70% YoY rise) was a fourth-quarter record. Across the firm’s core lending operations, businesses were strong: The firm reported a 9% YoY increase to $14.5bn in net interest income on loan growth and rising interest rates. Its net interest margin, a key profitability figure, of 2.54% was a 3-bpt improvement from 3Q18 and matched FactSet consensus  analysts’ expectations. Non-interest expenses rose 6% YoY to $15.7bn, slightly higher than consensus analysts’ estimates of $15.6bn, as it invested in technology and high-level hires.

CEO Jamie Dimon said in the results release that despite “a challenging quarter, we grew markets revenue in the investment bank for the year with record performance in equities and solid performance in fixed income,”.

The share price is slightly down (-0.1%) in pre-market trading. JP Morgan’s share price fell 8.7% last year,. According to CNBC this is the smallest decline among the six biggest banks in 2018.



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WEBINAR | The Navigator – Anchor’s Strategy and Asset Allocation, 2Q24

Anchor CEO and Co-CIO Peter Armitage will host the webinar, provide an introduction to current global and local market conditions and give his thoughts on offshore equities. Together with Head of Fixed Income and Co-CIO Nolan Wapenaar, Pete will also discuss Anchor’s strategy and asset allocation for 2Q24, focusing on global equities and bonds. In addition, Fund Manager Liam Hechter will provide insights into local equities, highlighting some investment ideas; Global Equities Analyst James Bennet will discuss Ferrari and give an update on Tesla, and finally, Analyst Thomas Hendricks will participate in a Q&A with Peter, explaining the 10-year US Treasury to attendees.