New York (AFP) – JPMorgan Chase reported lower fourth-quarter profits Tuesday as CEO Jamie Dimon endorsed Federal Reserve independence and offered an upbeat reading on the US economy. The giant US bank reported $13.0 billion in profits, down seven percent from the year-ago period following a $2.1 billion hit connected to the assumption of the Apple credit card, replacing Goldman Sachs. While revenues rose seven percent to $45.8 billion, bank executives expressed disappointment at the performance of investment banking. Shares of the bank finished down 4.2 percent, dragging on the Dow index. Some analysts questioned a plan to lift capital spending by more than $9 billion, in part due to increased technology investment. A note from Morningstar also pointed to the bank’s lofty valuation.
Dimon, who has struck a cautious tone in some recent quarters, characterized the United States outlook as “pretty positive,” while also offering a strong defense of Federal Reserve Chair Jerome Powell, who is under investigation by President Donald Trump’s Justice Department. Powell has dismissed the DOJ probe into a Fed construction project as a pretext for Trump’s criticism of US monetary policy decisions. “While I don’t agree with everything the Fed has done, I do have enormous respect for Jay Powell,” said Dimon, who predicted that any effort to weaken Fed independence would backfire and “probably increase (interest) rates over time.”
Executives also took issue with a call by Trump last week to cap credit card interest at 10 percent. Trump said he is “calling for a one year cap” from January 20, according to a January 9 social media post. “Actions like this will have the exact opposite consequence to what the administration wants in terms of helping consumers,” said JPMorgan Chief Financial Officer Jeremy Barnum. “Instead of lowering the price of credit, it will simply reduce the supply of credit.” Barnum said it was too early to quantify the impact because “there’s just way too much uncertainty about the whole thing.”
In terms of performance, the bank scored higher net interest income, a closely watched benchmark measuring the difference between revenue from lending and outward-bound interest payments. Expenses grew five percent, with the bank citing increases in front office employees, higher occupancy expense, and other factors. In its commercial and investment bank, JPMorgan benefited from increases in trading-related revenues in financial markets, but investment banking revenue and fees both fell. Barnum said some of the weakness in investment banking was because some companies chose to push back deals into 2026. But “it’s also true that I think our performance was not what we would have liked,” he said.
The drop in earnings from the year-ago period was due to higher credit costs, with JPMorgan establishing a $2.2 billion reserve to cover the Apple credit card portfolio. Dimon said “the US economy has remained resilient,” adding that “while labor markets have softened, conditions do not appear to be worsening.” Meanwhile, consumers continue to spend, and businesses generally remain healthy. While Dimon said these conditions could persist, “as usual, we remain vigilant, and markets seem to underappreciate the potential hazards — including from complex geopolitical conditions, the risk of sticky inflation, and elevated asset price.”
© 2024 AFP
