JPMorgan 4Q profits rise, helped by higher interest rates

Jan 13, 2023, 5:44 AM | Updated: Jan 14, 2023, 11:47 am
FILE - A Chase Bank is seen, Wednesday, Feb. 3, 2021, in Woburn, Mass. JPMorgan reports earnings on...

FILE - A Chase Bank is seen, Wednesday, Feb. 3, 2021, in Woburn, Mass. JPMorgan reports earnings on Friday, Jan. 13, 2023. (AP Photo/Elise Amendola)

(AP Photo/Elise Amendola)

NEW YORK (AP) — JPMorgan Chase & Co. said its fourth-quarter profits rose 6% from a year ago, as higher interest rates helped the bank make up for a slowdown in deal-making in its investment bank. The bank also set aside more than $2 billion to cover potential bad loans and charge-offs in preparation for a possible recession.

The New York-based bank said Friday that it earned $11.0 billion last quarter, up from $10.4 billion in the same period a year earlier. On a per-share basis, JPMorgan said it earned a profit of $3.57 a share compared to $3.33 a share in 2021, much better than the $3.08 a share that analysts were expecting.

The biggest driver of JPMorgan’s profits this quarter was higher interest rates. The bank, like its competition, has been helped considerably by the Federal Reserve hiking rates aggressively to combat inflation as banks can charge more for loans.

JPMorgan’s net interest income was $20.3 billion, up 48% from a year earlier.

But at the same time that the Fed’s rate hikes have helped JPMorgan’s bottom line, the chance that the Fed will push the U.S. economy into recession has increased as well. JPMorgan set aside $1.4 billion to cover potentially bad loans, and incurred roughly $900 million in charge-offs. The bank said it needed to set aside more money to cover bad loans due to “a modest deterioration” in the firm’s economic outlook, which now calls for a “mild” recession.

However JPMorgan as well as other banks remains upbeat about the health of the U.S. consumer. JPMorgan saw a double-digit rise in credit card spending from a year earlier.

“The U.S. economy currently remains strong with consumers still spending excess cash and businesses healthy,” said Jamie Dimon, chairman and CEO of JPMorgan Chase, in a statement. “However, we still do not know the ultimate effect of the headwinds coming from geopolitical tensions including the war in Ukraine, the vulnerable state of energy and food supplies, persistent inflation that is eroding purchasing power and has pushed interest rates higher, and the unprecedented quantitative tightening.”

Last year’s market decline hit JPMorgan’s investment bank particularly hard in the last quarter. The bank reported a 27% decline in profits in its corporate and investment bank, mostly caused by a more than 50% drop in investment banking fee revenues. Deal-making last year slowed considerably, as many companies chose to hold off any big moves due to the Fed’s rate hikes.

For the full year, JPMorgan had revenue of $128.7 billion while profits fell 22% from 2021 to $37.7 billion. Most of the decline in JPMorgan’s full-year profits were tied to the higher credit costs the bank had to expense for the loan losses.

JPMorgan shares rose slightly in morning trading. The shares are up nearly 4% so far in 2023.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Associated Press

Germany hopes to get ‘green hydrogen’ from Australia by 2030

BERLIN (AP) — A senior German official said Friday that she hopes her country will receive hydrogen made with renewable energy from Australia by 2030. The two countries have stepped up plans for cooperation on clean energy as Germany tries to find replacements for Russian gas supplies while pursuing an ambitious policy of reducing its […]
5 hours ago
Associated Press

Low-cost fashion chain H&M reports 4th-quarter loss

STOCKHOLM (AP) — Low-cost fashion brand H&M said Friday that shutting down its business in Russia and Belarus had a significant negative impact on its results, while increases in the costs of raw materials and freight and a strong U.S. dollar made purchases more expensive. The Sweden-based group said its net profit for the year […]
5 hours ago
FILE- Adani Group Chairman Gautam Adani attends the 'Invest Karnataka 2016 - Global Investors Meet'...
Associated Press

Adani mulls suing US short-seller as shares sink up to 20%

NEW DELHI (AP) — Shares in India’s Adani Group plunged up to 20% on Friday and the company said it was considering legal action against U.S.-based short-selling firm Hindenburg Research for allegations of stock market manipulation and accounting fraud that have led investors to dump its stocks. The heavy selling of Adani-linked shares, which has […]
5 hours ago
A currency trader passes by the screens showing the Korea Composite Stock Price Index (KOSPI), left...
Associated Press

Global shares edge higher, tracking Wall Street rally

TOKYO (AP) — Global shares advanced Friday, tracking a rally on Wall Street following reports suggesting the economy and corporate profits may be doing better than feared. France’s CAC 40 gained 0.2% to 7,107.44. Germany’s DAX was unchanged at 15,134.04, while Britain’s FTSE 100 rose nearly 0.2% to 7,773.10. The future for the Dow Jones […]
5 hours ago
Senate Appropriations Committee ranking member Sen. Susan Collins, R-Maine, left, and Senate Approp...
Associated Press

5 women, immense power: Can they keep US from fiscal brink?

WASHINGTON (AP) — They are now among the most powerful women in Congress. But when they were first elected in the 1990s, they were often overlooked, or even talked down to. Rep. Kay Granger, R-Texas, remembers that men would avoid asking her questions, addressing other men in the room instead. Rep. Rosa DeLauro, D-Conn., says […]
1 day ago
FILE - An employee adds drops of water-soluble CBD, or cannabidiol, an essential component of medic...
Associated Press

Hong Kong to ban CBD, label it a ‘dangerous drug’

HONG KONG (AP) — Hong Kong will ban CBD starting Wednesday, categorizing it as a “dangerous drug” and mandating harsh penalties for its smuggling, production and possession, customs authorities announced Friday. Supporters say CBD can treat a range of ailments including anxiety and that, unlike its more famous cousin THC — which is already illegal […]
1 day ago

Sponsored Articles

...
Day & Night Air Conditioning, Heating and Plumbing

Company looking for oldest air conditioner and wants to reward homeowner with new one

Does your air conditioner make weird noises or a burning smell when it starts? If so, you may be due for an AC unit replacement.
(Pexels Photo)...

Sports gambling can be fun for adults, but it’s a dangerous game for children

While adults may find that sports gambling is a way to enhance the experience with more than just fandom on the line, it can be a dangerous proposition if children get involved in the activity.
...
Quantum Fiber

Stream 4K and more with powerful, high-speed fiber internet

Picking which streaming services to subscribe to are difficult choices, and there is no room for internet that cannot handle increased demands.
JPMorgan 4Q profits rise, helped by higher interest rates