JPMorgan Chase reported Tuesday that fourth-quarter net income rose 9% on an adjusted basis, beating analyst expectations despite a one-time $2.2 billion loan-loss reserve charge tied to its purchase of the Apple Card portfolio from Goldman Sachs. The bank earned $13.03 billion, or $4.63 per share, for the quarter, with adjusted earnings of $5.23 per share exceeding the $4.85 consensus analyst estimate, according to FactSet.
The results open a bank earnings season being closely tracked by investors, who are simultaneously weighing a broadly healthy economy against escalating Washington interventions — including President Donald Trump’s push to cap credit card interest rates at 10% and an unprecedented Department of Justice subpoena served to Federal Reserve Chair Jerome Powell.
JPMorgan Chase, the largest U.S. bank by assets, said Tuesday that its fourth-quarter profits rose 9% on an adjusted basis, driven by strength in both its consumer and investment banking divisions, as the bank also absorbed a one-time charge from its acquisition of the Apple Card credit card portfolio from Goldman Sachs.
The bank reported net income of $13.03 billion, or $4.63 per share. The results included a 60-cents-per-share reduction from $2.2 billion in loan-loss reserves JPMorgan added to its balance sheet to cover the risk of the Apple Card portfolio it purchased from Goldman Sachs last week. Excluding those reserves, the bank earned $5.23 per share, above the $4.85 consensus estimate from analysts surveyed by FactSet, though some analysts had not updated their forecasts to account for the Apple Card acquisition before the results were published.
Revenue for the quarter totaled $45.8 billion, up 7% from a year earlier. Shares of the New York-based bank fell roughly 3% in morning trading to $314.74.
Dimon cites steady economy, flags policy tailwinds
In a statement accompanying the results, JPMorgan Chief Executive Jamie Dimon offered a broadly optimistic assessment of the economy while flagging softness in the labor market.
“While labor markets have softened, conditions do not appear to be worsening,” Dimon said. “Meanwhile, consumers continue to spend, and businesses generally remain healthy. These conditions could persist for some time, particularly with ongoing fiscal stimulus, the benefits of deregulation and the Fed’s recent monetary policy.”
Washington policy moves shadow earnings season
JPMorgan’s results opened a bank earnings week that includes Bank of New York Mellon Corp., but investor attention is split between corporate fundamentals and two significant developments in Washington.
President Donald Trump announced Friday that he would like to cap credit card interest rates at 10% and supports congressional legislation to that effect. A cap at that level would cut significantly into the revenue banks and card issuers earn on revolving balances, which commonly carry rates well above that threshold.
Separately, Federal Reserve Chair Jerome Powell said Sunday that the Department of Justice had served the central bank with subpoenas and threatened a criminal indictment over his congressional testimony this past summer about the Fed’s building renovations. The move represents an escalation in the Trump administration’s ongoing confrontation with the Fed, an independent agency Trump has repeatedly criticized for not cutting its benchmark interest rate as quickly as he prefers.