NEW YORK – JPMorgan Chase says fourth-quarter profits fell 14% from a year earlier, due to a weaker performance from its trading desk and higher compensation expenses for employees.
Even with the weaker quarter, JPMorgan had a record annual profit, nearly $50 billion. The total is significantly more than what the bank brought in during 2019, before the pandemic.
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The bank, like others in the financial industry, also continues to deal with the impact of near-zero interest rates. Low rates have kept JPMorgan's revenue mostly flat for the past year.
The New York-based financial giant on Friday reported a profit of $10.4 billion, or $3.33 per share for the last three months of 2021. That's down from a profit of $12.14 billion, or $3.79 a share, in the same period a year ago. While JPMorgan's profits fell, the results were still better than what analysts had forecast, with the average per-share profit on FactSet being $3.01.
For the past several quarters, JPMorgan has been able to make up for flat interest rates by having a strong performance out of its investment bank and by releasing billions of dollars from its so-called loan-loss reserves. The reserves are money the bank set aside in the first months of the pandemic to cover potentially bad loans. Those loan-loss reserve releases gave the a bank several one-time boosts to its profits.
Those reserve releases have decreased over the course of the year. JPMorgan released a net $1.3 billion in loans in the fourth quarter, compared with the $4.16 billion it released in the first quarter.
Trading was also weaker. The corporate and investment banks posted a division profit of $4.85 billion, down from $5.3 billion a year earlier. While the investment bankers were able to boost profits through deal-making and advisory services last quarter, trading revenues fell 17% from last year. The bank blamed a “challenging trading environment” in bonds as well as currency trading.
For the full year, JPMorgan earned a profit of $48.33 billion. That's up from the $29.1 billion the bank earned in 2020, which was impacted by the pandemic. It's also significantly better than what the $36.4 billion profit for 2019.