It counts for mixed news at JPMorgan Chase that it made $57 billion in profit last year, as the bank reported on Tuesday.
It wasn’t a calamity — last year’s total was a record $59 billion — but it was noteworthy, particularly given that JPMorgan’s chief executive, Jamie Dimon, saw a personal windfall of $770 million during the period as the bank’s shares rose. The New York bank flagged a litany of factors for earnings not reaching higher, including a need to sock away more money for potential credit card losses, weakness in a niche area of its investment bank and the general drag of lower interest rates.
JPMorgan tends to make more money each year. The exceptions have typically resulted from global economic factors, like the 2008 financial crisis and the Covid-19 pandemic, or because of its own foibles, like the “London whale” trading scandal.
This quarter had a bit of both. The Federal Reserve cut interest rates three times last year, and, as is typical for banks, JPMorgan trimmed to 2.2 percent from 2.7 percent the average rate it offers on deposits.
That was bad news for ordinary savers. It was also a drag on JPMorgan’s business, because the higher the benchmark rate, the more opportunity for the country’s biggest lender to profit from the gap between what it charges for loans and pays out for deposits. But lower rates also help spur acquisitions and initial public offerings — all areas that help JPMorgan’s investment bank.
Mr. Dimon’s prepared remarks accompanying the bank’s earnings report rarely change much, and what he added this time around was an attempt at optimism. JPMorgan hoped to feed off “the benefits of deregulation and the Fed’s recent monetary policy,” in the long term, he said.
In a call with reporters, the usually chatty executive was reluctant to dive into current events. Asked about the Department of Justice’s criminal investigation of Jerome H. Powell, the chair of the Federal Reserve, Mr. Dimon first emphasized that he did not always agree with the Fed chief, then said he respected him.
“Everyone believes in Fed independence — anything that chips away at that is probably not a great idea,” he said. When a different reporter asked a follow-up question, the bank’s chief financial officer, Jeremy Barnum, jumped in with “we’ve said enough.”
Last week, JPMorgan announced that it would take over Apple’s branded credit card from Goldman Sachs and that, too, weighed on results. JPMorgan said it had set aside $2 billion for potential short-term losses from the acquisition to ward against the risk that card holders did not pay their bills.
That acquisition was quickly complicated late Friday when President Trump announced his intention to impose a 10 percent cap on credit-card interest rates, although it was not clear how he could do so unilaterally. Mr. Barnum would not say whether the bank intended to comply with the president’s statement, and he reiterated the usual lender argument that a fee cap would force them to restrict credit for borrowers who need it.
For the fourth quarter, JPMorgan earned $13 billion, down 7 percent from the same quarter a year ago.
Rob Copeland is a finance reporter for The Times, writing about Wall Street and the banking industry.
The post JPMorgan Made Less Money Last Year, Facing Pressure on Multiple Fronts appeared first on New York Times.
