JPMorgan reports a Q4 earnings beat – but CEO Jamie Dimon warns of economic uncertainty ahead
- JPMorgan published fourth-quarter earnings that beat Wall Street's forecasts Friday.
- But CEO Jamie Dimon warned that the war in Ukraine and the Federal Reserve's rate-hiking campaign are likely to cause significant economic uncertainty this year.
JPMorgan Chase beat Wall Street's forecasts when it reported fourth-quarter earnings Friday – but shares fell nearly 3% as the bank's CEO Jamie Dimon warned of economic uncertainty ahead.
The biggest US bank reported managed revenues of $35.6 billion, beating Refinitiv consensus estimates of $34.3 billion, and earnings-per-share of $3.57, significantly outperforming the $3.06 figure that analysts had expected.
Higher interest rates helped JPMorgan to beat Wall Street's earnings expectations. The bank said its net interest income – which measures the difference in what it pays on deposits and earns on loans – had jumped to $20.3 billion, up 48% from the fourth quarter of 2021.
But JPMorgan's credit loss provision – the amount of money it puts aside to cover bad loans – jumped 48% quarter-on-quarter to $2.3 billion – which it said reflected the fact that a mild recession is now its "central case" economic outlook.
The bank also warned that its return on tangible capital equity (ROTCE), which measures how much profit a bank generates from shareholders' money, may fall below its target of 17% this year if capital markets' slowdown continues and high inflation drives up costs.
Shares fell 2.7% to trade at $135.72 shortly after Friday's opening bell as investors digested the earnings release, which covered the three months up until December 31.
Dimon said consumers' pandemic-era savings are propping up the US economy for now – but warned that both the ongoing war in Ukraine and the Federal Reserve's aggressive tightening campaign to quell inflation make the longer-term outlook less certain.
"The US economy currently remains strong with consumers still spending excess cash and businesses healthy," he said. "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."