JPMorgan's Plan for a Big Expense Boost Sends Shares Soaring

Stock slide due to slump in trading-revenue and muted loan growth

JPMorgan's Plan for a Big Expense Boost Sends Shares Soaring

Bank reports a 1% decrease in commercial and consumer loans

JPMorgan Chase & Co. fell as low as 6.4%, after the company stated that compensation and other costs jumped during the fourth quarter ahead a expected increase this year.

The firm forecasts that expenses will rise to $77 billion in 2019, excluding legal costs. This would represent an 11% increase over the previous year. This forecast, combined with poorer-than-expected trading results, and muted loan growth, led to the stock's steepest drop since June 2020.

"JPMorgan's results weren't surprising and were hampered uncharacteristically by poor expense management," Octavio Martenzi, chief executive of consultancy Opimas LLC, stated in an email. He said that the real surprise was the 5% increase of non-interest expense. This is a jump from the third quarter.

New York-based JPMorgan shares fell 5.4% to $159.10 in New York at 11:16 AM. This was a decrease of its gains in the last 12 months to 13%.

According to the largest U.S. bank, net interest income (excluding markets) will be $50 billion in the full year. This is higher than 2021. Jeremy Barnum, Chief Financial Officer, stated that the investment-banking pipeline was "quite strong" during the first quarter.

Barnum stated that the bank is seeing an increase in loan growth after reporting 1% drop in both consumer loans and business loans a year ago.

Barnum cited inflation and JPMorgan's plans for investments. He said that the bank is "in" for a few years of sub-target returns.

Fixed-income trading revenue fell 16%, which is worse than the 13.5% decline analysts expected. The 9% estimate for total trading revenue was wrong, and it fell 11%. Fixed-income was the largest loser but equities revenue fell 2% to $1.95billion.

Barnum stated that the bank experienced a slight decline in credit card spending at the quarter's end, which could be due to the increasing virus cases rates.

Still, the company's dealmakers posted their best quarter ever on a booming merger-and-acquisition market. M&A fees increased 86% to $1.56 Billion in the fourth quarter. This was higher than analysts expected and helped push the company's net income up to $10.4 Billion, as opposed to $9 billion.

Stock slide due to slump in trading-revenue and muted loan growth

Bank reports a 1% decrease in commercial and consumer loans

JPMorgan Chase & Co. fell as low as 6.4%, after the company stated that compensation and other costs jumped during the fourth quarter, ahead of an expected increase this year.

The firm forecasts that expenses will rise to $77 billion in 2019, excluding legal costs. This would represent an 11% increase over the previous year. This forecast, combined with poorer-than-expected trading results, and muted loan growth, led to the stock's steepest drop since June 2020.

"JPMorgan's results weren't surprising and were hampered uncharacteristically by poor expense management," Octavio Martenzi, chief executive of consultancy Opimas LLC, stated in an email. He said that the real surprise was the 5% increase of non-interest expense. This is a jump from the third quarter.

New York-based JPMorgan shares fell 5.4% to $159.10 in New York at 11:16 AM. This was a decrease of its gains in the last 12 months to 13%.

According to the largest U.S. bank, net interest income (excluding markets) will be $50 billion in the full year. This is higher than 2021. Jeremy Barnum, Chief Financial Officer, stated that the investment-banking pipeline was "quite strong" during the first quarter.

Barnum stated that the bank is seeing an increase in loan growth after reporting a 1% drop in both consumer loans and business loans a year ago.

Barnum cited inflation and JPMorgan's plans for investments. He said that the bank is "in" for a few years of sub-target returns.

Fixed-income trading revenue fell 16%, which is worse than the 13.5% decline analysts expected. The 9% estimate for total trading revenue was wrong, and it fell 11%. Fixed-income was the largest loser but equities revenue fell 2% to $1.95billion.

Barnum stated that the bank experienced a slight decline in credit card spending at the quarter's end, which could be due to the increasing virus cases rates.

Still, the company's dealmakers posted their best quarter ever on a booming merger-and-acquisition market. M&A fees increased 86% to $1.56 Billion in the fourth quarter. This was higher than analysts expected and helped push the company's net income up to $10.4 Billion, as opposed to $9 billion.

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