JP Morgan Chase (JPM) earnings Q4 2019

JP Morgan Chase (JPM) earnings Q4 2019

J.P. Morgan Chase posted profit and revenue that exceeded analysts’ expectations on a strong rebound in trading revenue at the end of 2019. 

The bank said Tuesday that fourth-quarter profit rose 21% to $8.52 billion, or $2.57 a share, compared to the $2.35 estimate of analysts surveyed by Refinitiv. Managed revenue climbed 9% to $29.2 billion, compared with the $27.94 billion estimate. Shares of the bank gained 1.9% in early trading Tuesday.

CEO Jamie Dimon noted that his investment bank produced record revenue for a fourth quarter, aided by a rebound in trading revenue.

Profit in the division surged 48% to $2.9 billion, mainly on the back of the firm’s traders and salespeople. Bond trading revenue surged 86% to $3.4 billion, exceeding the $2.61 billion estimate by roughly $800 million, as fixed-income desks were humming, particularly in securitized products and rates. Stock traders posted a 15% increase in revenue to $1.5 billion, compared with the $1.35 estimate. 

“JPMorgan Chase produced strong results in the fourth quarter of 2019, capping off a solid year for the firm where we achieved many records, including record revenue and net income,” Dimon said in the release. “While we face a continued high level of complex geopolitical issues, global growth stabilized, albeit at a lower level, and resolution of some trade issues helped support client and market activity towards the end of the year.”

CFO Jennifer Piepszak said last month that trading revenue was “meaningfully” higher in the fourth quarter versus a year ago. The rebound comes from the industry’s’ fixed-income trading operations, projected to rise 25% on average, versus a 3% bump in stock trading revenue, KBW analyst Brian Kleinhanzl wrote last month.

Bank stocks finished 2019 on a tear, outpacing the broader stock indices in the fourth quarter as investors rushed into an under-owned sector. J.P. Morgan, in particular, surged last year, climbing about 40%, a sharp move higher than prompted some analysts to cut their recommendations based on valuation.

But banks may face pressure this year as interest rates stay low or are even slashed further. The Federal Reserve cut its benchmark rates for the third time in October, and that pressures net interest income, or the revenue that banks garner from collecting loan payments, minus the interest it pays to depositors.

Here’s what Wall Street expected:

Earnings: $2.35 a share, a 19% increase from a year earlier, according to Refinitiv.

Revenue: $27.94 billion, a 4.2% increase from a year earlier.

Net Interest Margin: 2.37%, according to FactSet

Trading Revenue: Fixed income $2.61 billion, Equities $1.37 billion

This story is developing. Please check back for updates.

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