JPMorgan 4Q earnings fall 14%, but 2021 profit sets record

JPMorgan 4Q earnings fall 14%, but 2021 profit sets record
Written by Publishing Team

New York (AFP) – JPMorgan Chase said fourth-quarter profit fell 14% from a year earlier, due to the poor performance of its trading desk and higher compensation expenses for employees.

Even with the weakest quarter, JPMorgan posted a record annual profit of about $50 billion. The total amount is much greater than what the bank brought in during 2019, before the pandemic.

The bank, like others in the financial industry, continues to deal with the impact of near-zero interest rates. Low rates have kept JPMorgan’s returns mostly flat over the past year.

The New York-based financial giant on Friday reported earnings of $10.4 billion, or $3.33 a share, for the last three months of 2021. That’s down from a profit of $12.14 billion, or $3.79 a share, in the same period last year. While JPMorgan’s earnings declined, results were still better than analysts had expected, with average earnings per share on FactSet of $3.01.

Over the past several quarters, JPMorgan has been able to offset its fixed interest rates through strong performance from its investment bank and by releasing billions of dollars in so-called loan-loss reserves. Reserves are money the bank set aside in the early months of the pandemic to cover potential bad loans. These loan loss reserve issuances gave the bank several one-time increases to its earnings.

These backup versions have decreased throughout the year. JPMorgan issued net loans of $1.3 billion in the fourth quarter, compared to $4.16 billion in the first quarter.

Trading was also weaker. Investment banks and companies posted profits of $4.85 billion, down from $5.3 billion a year earlier. And while investment bankers were able to increase their profits through deal-making and advisory services last quarter, trading returns were down 17% from a year ago. The bank blamed a “challenging trading environment” in bonds as well as currency trading.

For the full year, JPMorgan posted a profit of $48.33 billion. That’s up from the $29.1 billion the bank made in 2020, which was affected by the pandemic. It’s also much better than what it earned $36.4 billion for 2019.

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