- The stock price of JPMorgan Chase & Co. (NYSE: JPM) fell by over 5% during intraday trading today. This is why it happened.
The stock price of JPMorgan Chase & Co. (NYSE: JPM) fell by over 5% during intraday trading today. Investors are responding negatively to the company revealing in its fourth-quarter 2021 results that its compensation and other costs increased.
The expenses for the last 3 months of 2021 increased 11% compared to a year earlier. Specifically, the company is expected to rise around $77 billion this year excluding legal costs, which would have been an 8.6% increase. These costs are higher than what the company was expecting.
The company’s total trading revenue fell 11% compared to a 9% estimate. And while the company’s fixed-income business was one of the biggest pain points for the company, the equities revenue also saw a drop, falling 2% to $1.95 billion. Plus the company also reported slower credit card spending at the end of the last quarter.
But the company posted its best quarter ever due to a surge in M&A. The M&A fees increased 86% in Q4 to $1.56 billion. And net income increased to $10.4 billion compared to expectations of $9 billion.
“JPMorgan Chase reported solid results across our businesses benefiting from elevated capital markets activity and a pick up in lending activity as firmwide average loans were up 6%. The economy continues to do quite well despite headwinds related to the Omicron variant, inflation, and supply chain bottlenecks. Credit continues to be healthy with exceptionally low net charge-offs, and we remain optimistic on U.S. economic growth as business sentiment is upbeat and consumers are benefiting from job and wage growth.”
“Global IB fees were up 37%, driven by both the Corporate & Investment Bank and Commercial Banking, due to unprecedented M&A activity, an active acquisition financing market, and strong performance in IPOs. Markets revenue was down 11%, compared to a record fourth quarter last year, but up 7% versus the 2019 quarter driven by a strong performance in Equities. Asset & Wealth Management delivered robust results as we saw positive inflows into long-term products of $34 billion across all channels and regions, as well as continued strong loan growth, up 18%, primarily driven by securities-based lending. In Consumer & Community Banking, client investment assets were up 22%, with growth from higher market levels and positive net flows. Combined debit and credit card spend was up 26%, supporting accelerating Card loan growth, up 5%. Auto loans remain elevated, up 7%, although a lack of vehicle supply slowed originations to $8.5 billion, down 23%. Home lending had another strong quarter with originations at $42 billion, up 30%.”
“In 2021, we extended credit and raised over $3 trillion in capital for our consumer and institutional clients around the world, which includes nonprofits and U.S. government entities, including states, municipalities, hospitals and universities. We also accelerated investments to expand our product distribution capabilities, both domestically and internationally, enhance our products and services and modernize our technology. We continue to find attractive opportunities to invest in our businesses across the firm. Our longstanding capital hierarchy remains the same – first and foremost, to invest in and grow our market-leading businesses to support our clients, customers and communities; second, to pay a sustainable competitive dividend; and then, return any remaining excess capital to shareholders.”
— Jamie Dimon, Chairman and CEO
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