JPMorgan Chase (JPM 2.98%), the largest bank in the United States by assets, just reported its fourth-quarter earnings. The stock recently hit a fresh all-time high, and today's report shows the move was completely justified.
For starters, the bank handily beat estimates on both the top and bottom lines. Earnings of $3.79 per share were about 45% higher than Wall Street analysts had been looking for, and revenue of $30.16 billion exceeded expectations by almost $1.5 billion.
Looking beyond the headline numbers, here are some of the key highlights:
- The bank's average loan portfolio during the fourth quarter was 1% higher than a year ago (impressive, given the pandemic), but deposits increased by 35% from the same point in 2019.
- JPMorgan Chase produced a 19% return on equity (ROE) for the quarter, up from 14% a year ago. The profitability metric was certainly helped by reserve releases, but this is still impressive. For the full year, the bank ran a 12% ROE and 54% efficiency ratio.
- JPMorgan Chase had the No. 1 ranking for global investment banking fees, which increased 34% year over year.
- Trading revenue, which has been a very strong point throughout the pandemic, increased 20% year over year, including 32% growth in equities trading revenue.
- Assets under management in the company's asset and wealth management segment grew 17% year over year to $2.7 trillion.
- Book value for the stock increased by 8.4% over the past year to $66.11.
- Share buybacks will resume in the first quarter, and the bank reported that it has $4.5 billion of buyback capacity for the period.
On another positive note, JPMorgan Chase released $2.9 billion of reserves that it had set aside earlier in the COVID-19 pandemic. CEO Jamie Dimon specifically cited the rollout of COVID-19 vaccines and recent stimulus efforts as reasons the bank is confident enough that the $30 billion still set aside will be more than sufficient.
To be sure, the news wasn't all good. For example, the consumer banking division saw interest margins plunge by 86 basis points from a year ago. But overall, this was an excellent quarter for JPMorgan Chase. A high bar has just been set for the rest of the banking industry this earnings season.