1/12/2024: JP Morgan Profits Declined 29%

JP Morgan reports Q4 earnings this morning. Revenue was $39.94B vs. $39.78B expected. Adjusted EPS was $3.97 vs. $3.32 expected. It was a strong quarter despite a QoQ decline in revenue and profits. Overall, JPM 0.00%↑ had a great 2023, making ~$50B of profits from the growing net interest income. Higher interest rates make big banks like JPM 0.00%↑ more profitable! They still pay 0% on my checking account deposit but they can charge a much higher rate for loaning out money.  

In his letter to shareholders, CEO Jamie Dimon said:

The U.S. economy continues to be resilient, with consumers still spending, and markets currently expect a soft landing. It is important to note that the economy is being fueled by large amounts of government deficit spending and past stimulus. There is also an ongoing need for increased spending due to the green economy, the restructuring of global supply chains, higher military spending and rising healthcare costs. This may lead inflation to be stickier and rates to be higher than markets expect. On top of this, there are a number of downside risks to watch. Quantitative tightening is draining over $900 billion of liquidity from the system annually, and we have never seen a full cycle of tightening. And the ongoing wars in Ukraine and the Middle East have the potential to disrupt energy and food markets, migration, and military and economic relationships, in addition to their dreadful human cost. These significant and somewhat unprecedented forces cause us to remain cautious. While we hope for the best, the past year demonstrated why we must be prepared for any environment.

Mr. Dimon has some cautionary words there. It sounds scary.  Let’s see how 2024 plays out.