JPM Earnings Jump On Slashed Expenses, Bond Trading Beats As Equity, IB Misses; Credit Card Charge-Offs Spike

In a report that was somewhat similar to that of Bank of America,  JPM reported Q4 revenues of $23.4 billion, beating estimates of $23.1 billion, on EPS of $1.71, far higher than the expected $1.42, which however like in the case of BofA was due to a cut in expenses, which came in at $6.87 billion, far below the $7.2 billion, suggesting even greater expense – i.e. compensation – reductions.

While JPM’s net Interest Income was up $553mm YoY and up $163mm QoQ, this happened even as NIM declined by 2bps QoQ. That said, like BofA, JPM said it expects firmwide net interest income to be up “modestly” QoQ.

On the key, trading side, JPM reported that while investment banking revenue rose by $17mm Y/Y to $1.49 billion, it missed expectations of $1.59bn, and while FICC of $3.37 billion rose by $795 million, beating expectations of $3.26 bn, equity markets revenue of $1.15 billion came in weaker than the $1.29 billion expected.

Some details from the report:

  • IB revenue of $1.5B, up 1% YoY, driven by higher debt underwriting fees, largely offset by lower advisory and equity underwriting fees
  • Fixed Income Markets of $3.4B, up 31% YoY, driven by strong performance across products
  • Equity Markets revenue of $1.2B, up 8% YoY, driven by strong performance in derivatives

The better than expected net income in the investment bankin group was mostly the result of a big drop in expense of $4.2B, which was down 6% YoY, driven by lower compensation and lower legal expense.

Another highlight: net charge offs in the bank’s credit card services group jumped from $838 million to $914 million, the highest since Q2 2013.

Finally, JPM’s loan loss reserves of 13.8B rose $0.2B from $13.6B in the prior year.

Full presentation below:

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