Morgan Sinks on Profit Beat

JPMorgan Chase (NYSE:JPM) on Friday posted profit that exceeded analysts’ expectations on a benefit from better-than-expected credit losses and as loan growth returned to parts of the firms’ business.

JPMorgan said it took a $1.8-billion net benefit from releasing reserves for loan losses that never materialized; without that 47-cent -per-share boost, earnings would have been $2.86 per share.

After setting aside billions of dollars for loans losses earlier in the pandemic, JPMorgan benefited as it steadily released the funds as borrowers held up better than expected. But CEO Jamie Dimon has said he doesn’t consider the accounting benefit a core part of business results. Even when including the boost, JPMorgan posted the smallest earnings beat in the past seven quarters.

"The economy continues to do quite well despite headwinds related to the Omicron variant, inflation and supply chain bottlenecks," Dimon said in the release. "Credit continues to be healthy with exceptionally low net charge-offs, and we remain optimistic on U.S. economic growth."

While companywide revenue rose a modest 1% in the quarter to $30.35 billion as a slowdown in markets revenue was offset by robust investment banking fees, non-interest expenses shot up 11% to $17.9 billion on rising compensation costs, the bank said. That was higher than the $17.63 billion estimate of analysts.

JPM shares plunged $10.37, or 6.2%, to $157.86 to begin Friday.