Bank earnings beat expectations despite ‘headwinds’, JPMorgan CEO ‘prepared for whatever happens’

Name: Will central banks continue to gain power?
Uploaded: 2023-01-11T14:46:54-05:00
Duration: 5 min 17 s
Description: Grant's Interest Rate Observer editor Jim Grant breaks down what Wall Street doesn't want investors to hear and provides insight on the global economy on 'Making Money.'

Grant's Interest Rate Observer editor Jim Grant breaks down what Wall Street doesn't want investors to hear and provides insight on the global economy on 'Making Money.'

video

Will central banks continue to gain power?

Grant's Interest Rate Observer editor Jim Grant breaks down what Wall Street doesn't want investors to hear and provides insight on the global economy on 'Making Money.'

Despite a market rally to start the new year and upbeat earnings reports from major banks on Friday, JPMorgan CEO Jamie Dimon foresees more political and economic ‘headwinds’ down the road.

Fourth quarter earnings reports from JPMorgan Chase, Citigroup, Wells Fargo, and Bank of America all exceeded analysts’ expectations, even as deal activity like home mortgage loans and initial public offerings decreased.

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JPMorgan’s Dimon said in the company’s release, "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."

JP Morgan CEO Jamie Dimon looks on during the inauguration the new French headquarters of JP Morgan bank, June 29, 2021 in Paris. (AP Photo/Michel Euler, Pool / AP Newsroom)

"We remain vigilant and are prepared for whatever happens, so we can serve our customers, clients and communities around the world across a broad range of economic environments," he added.

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JPMorgan – Q4 highlights

The bank’s net income jumped 6% to $11 billion, while net revenue went up 17% to $35.6 billion and net interest income jumped 48% to $20.3 billion.

CEO Dimon: "Our lines of business performed well in the quarter, and we continued to see momentum in our areas of strategic focus." (Erik McGregor/LightRocket via Getty Images / Getty Images)

Meanwhile, the largest U.S. bank by assets reported average loans went up 6%, average deposits slipped 4%, and client investment assets lost 10%.

Ticker	Security	Last	Change	Change %
JPM	JPMORGAN CHASE & CO.	246.25	-3.47	-1.39%

Citigroup- Q4 highlights

Citigroup reported net income of $2.5 billion over the fourth quarter 2022 on revenues of $18 billion.

"Over the course of 2022, we returned over $7 billion to our shareholders," Citi CEO, Jane Fraser (AP Photo/Mark Lennihan / AP Newsroom)

Revenues increased 6% from the prior-year period, but net income fell 21% from the same time one year ago.

U.S. Personal Banking revenues of $4.4 billion increased 10%. Branded Cards revenues of $2.4 billion increased 15%, primarily driven by the higher net interest income.

Ticker	Security	Last	Change	Change %
C	CITIGROUP INC.	70.87	+0.71	+1.01%

Wells Fargo- Q4 highlights

Despite the bank reporting a profit decline, slipping 50% to $2.86 billion over the fourth quarter, or 67 cents per share, it is still ahead of analyst estimates of 60 cents per share.

"Though the quarter was significantly impacted by previously disclosed operating losses, our underlying performance reflected the progress we are making to improve returns," CEO Charlie Scharf, (Wells Fargo via Associated Press / AP Images)

Throughout the fourth quarter, revenue decreased 5.7% to $19.66 billion, while net interest income increased by 45% to $13.43 billion. Wells Fargo also projected 10% growth in 2023 net interest income to about $49.5 billion.

Consumer and Small Business Banking was up 36%, driven by the impact of higher interest rates, while Home Lending fell 57% on lower mortgage banking income.

Ticker	Security	Last	Change	Change %
WFC	WELLS FARGO & CO.	75.28	-0.89	-1.17%

Bank of America – Q4 highlights

Net income reached $7.1 billion, compared to $7 billion from the same period in 2021, while net interest income went up 29% to $14.7 billion.

Revenue, net of interest expense, increased 11% to $24.5 billion.

"The themes in the quarter have been consistent all year as organic growth and rates helped deliver the value of our deposit franchise," Chair and CEO Brian Moynihan. (Reuters/Stephanie Keith / Reuters Photos)

Consumer Bank had record net income of $3.6 billion. Average loan and lease balances added 10% to $1 trillion as average deposits lost 5% to $1.9 trillion.

Global Wealth and Investment Management client balances dropped 12% to $3.4 trillion, driven by lower market valuations, partially offset by positive net client flows.

Ticker	Security	Last	Change	Change %
BAC	BANK OF AMERICA CORP.	47.04	-0.47	-0.99%

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