JPM earnings 4Q 2021

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JP Morgan CEO Jamie Dimon listens as he is introduced at the Boston College Chief Executives Club luncheon in Boston, Massachusetts, the United States, November 23, 2021.

Brian Snyder | Reuters

JPMorgan Chase posted earnings that beat analysts’ expectations as it benefited from better-than-expected credit losses and credit growth returned to parts of the company.

Here are the numbers:

  • Earnings: $3.33 per share, versus an estimated $3.01, according to Refinitiv.
  • Revenue: $30.35 billion versus an estimated $29.9 billion.

Shares of the bank fell 3% in premarket trading. JPMorgan said it took a net gain of $1.8 billion from the release of loan loss reserves that never materialized; Excluding that 47 cent per share increase, earnings would have been $2.86 per share.

After setting billions of dollars aside for loan losses early in the pandemic, JPMorgan benefited as it steadily released funds as borrowers held up better than expected. But CEO Jamie Dimon said he doesn’t see accounting utility as a core part of business results. Even factoring in the benefit, JPMorgan posted the smallest earnings hit in the last seven quarters.

“The economy continues to perform reasonably well despite headwinds related to the Omicron variant, inflation and supply chain constraints,” Dimon said in the release. “Credit remains healthy with exceptionally low net charge-offs and we remain optimistic on US economic growth.”

Government stimulus programs during the pandemic left consumers and businesses blushing, resulting in sluggish credit growth, prompting Dimon to say last year that credit growth was “challenged.” However, analysts have pointed to a rebound in the fourth quarter, driven by demand from businesses and credit card borrowers.

Analysts may also ask the bank about the impact of its recent decision to limit overdraft fees. JPMorgan said last month it would give customers a grace period to avoid the penalty fees, a move that, along with other changes, will have a “not inconsiderable” impact on revenue.

Daniel Pinto, JPMorgan’s chief operating officer, said during a conference last month that fourth-quarter trading income is heading for a 10% decline, driven by a decline in fixed-income activity from record levels. This compares to an expected 35% increase in investment banking fees, he said.

The bank had to pay $200 million in fines last month to settle allegations that its Wall Street division allowed workers to use messaging apps to circumvent record-keeping laws.

JPMorgan shares are up 6.2% this year, underperforming the 11.6% rise in the KBW Bank Index.

This story evolves. Please check back for updates.