Image source: JP Morgan Chase
JP Morgan Chase & Co. Announced higher-than-expected fourth-quarter earnings on Friday as it released some of the reserves allocated to cover potential loan defaults due to the struggle of businesses and households.
The Bank of New York’s net income was $ 12.1 billion, or $ 3.79 per share, up 42% in the quarter to 31 December. Revenue increased 3% to $ 30.2 billion. JP Morgan released $ 2.9 billion from its credit reserves in the fourth quarter, adding 72 cents to earnings per share.
Trading revenues in the fourth quarter set JP Morgan’s record, with equity trading at $ 1.99 billion and fixed income trading at $ 3.95 billion.
Jamie Dimon, Chairman and Chief Executive Officer of JP Morgan, said, “We reported good results in the fourth quarter of 2020 and benefited from diverse business models and dedicated employees to generate record revenue. We ended the difficult year we had. “
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“We reported a record profit of $ 12.1 billion, but we do not believe that a $ 2.9 billion reserve reduction represents core or recurring profit. Basically, the reserve calculation is very It’s done carefully, but now it includes multiple multi-year virtual probability adjustment scenarios, which may or may not occur, and we anticipate quarterly volatility in reserves. ” Stated in a statement.
Dimon pointed out two major developments in late 2020, the effective COVID-19 vaccine and the second federal stimulus financing, as reasons why banks cut some of their reserves.
In anticipation that a COVID-19-related shutdown would result in more loan defaults, JP Morgan was one of several banks last year to increase the amount of loan loss reserves.
According to Dimon, it will release $ 2.9 billion from reserves and maintain $ 30 billion in the fund, reflecting what he called “significant short-term uncertainty.”
The reserve added that “it will be able to withstand a much worse economic environment than most economists currently predict.”
In an interview with Reuters, Dimon said he hoped these developments would help the economy improve by the second half of 2021. “A lot of demand is stagnant and hopefully optimistic. Overcoming this turmoil. By some time this summer, you will have a very healthy economy,” Dimon said. Said.
Source: Stock News