JPMorgan posts record annual profits as big US banks thrive in final quarter of 2024

WASHINGTON (AP) — JPMorgan’s net income soared 50% to more than $14 billion in the fourth quarter, as the bank’s profits and revenue easily beat forecasts by Wall Street and other big banks reported record profits for the year as businesses and consumers continued to spend despite high interest rates.

JPMorgan’s earnings per share increased to $4.81 from $3.04 a year ago. The result beat Wall Street’s earnings forecast of $4.09 per share, according to data firm FactSet. Total revenue under management reached $43.7 billion, up 10% from $39.9 billion a year ago. Wall Street expected revenue of $41.9 billion.

JPMorgan reported record profit of $54 billion for the year, or $18.22 per share, adjusted for one-time expenses.

Shares of JPMorgan rose just under 1% in morning trading.

Citigroup, Wells Fargo and Goldman Sachs also reported good results on Wednesday.

The nation’s largest banks have benefited from higher interest rates over the past two years as the Federal Reserve raised rates to combat inflation that took root in the wake of the COVID-19 pandemic. 19.

The government’s latest consumer price report, also released on Wednesday, showed that prices of many essential goods have increasedpushing the consumer price index to 2.9% in December, its highest level since July. But underlying inflation trends – closely monitored by the Fed – slowed to 3.2% in December, better than analysts expected and a good sign for consumers and the economy as a whole.

This, combined with strong bank profits, boosted markets, with the S&P 500 and Dow Jones Industrials each climbing 1.7% and the tech-heavy Nasdaq gaining 2.2%.

Although 2024 was a great year for markets, bank stocks did even better, despite the Federal Reserve cutting its benchmark interest rate three times between September and December.

When it announced its latest cut in December, the Fed also reduced its rate cut forecasts for 2025 from four to two, with inflation remaining stubbornly above the Fed’s 2% target. This plunged markets into a mini-recession, but not enough to dampen what has been a spectacular 2024. The S&P gained 23% last year, the Nasdaq climbed more than 28% and the Dow finished up almost 13%.

On the banking side, shares of Goldman Sachs finished 2024 up 48%, while shares of JPMorgan posted a 41% gain and shares of Wells Fargo soared 43%.

JPMorgan reported on Wednesday that its interest income fell 3% to $23.5 billion, thanks to a slight drop in interest rates.

CEO Jamie Dimon said the bank benefited from the investment banking business, where fees rose 49% and markets revenue jumped 21%. The bank’s consumer banking business also thrived, with customers opening nearly 2 million checking accounts.

The New York bank set aside $2.6 billion to cover bad debts, down slightly from the same period last year.

Dimon said the U.S. economy remained strong, pointing to the country’s low unemployment rate and strong consumer spending.

“Businesses are more optimistic about the economy and are encouraged by expectations for a more pro-growth agenda and better collaboration between government and business,” he said, referring to the new Trump administration. who has promised to reduce regulations in all sectors.

Dimon said any regulations should strike a balance between promoting growth and ensuring the security of the banking system.

“It is not a question of weakening regulation (…) but rather of establishing rules that are transparent, fair and holistic in their approach and based on rigorous data analysis, so that banks can play their part essential role in the economy and markets.”

Dimon said, however, that the geopolitical situation “remains the most dangerous and complicated since World War II” and that JPMorgan is preparing for a wide range of outcomes.

JPMorgan announced this week that Dimon’s top deputy, Daniel Pinto, would step down as president and chief operating officer at the end of June and retire at the end of 2026. Jennifer Piepszak, co-CEO of the commercial and investment bank at the bank’s division, will assume the role of COO under Pinto’s leadership.

After Dimon said last spring that he planned to retire within five years, it was assumed that Pinto, who has been with the bank for more than 40 years, would take over as CEO.

A bank spokesperson said Tuesday that Piepszak is not currently interested in the CEO role when Dimon leaves the bank, which could open the door for another bank executive to fill the role when it opens. .

Wells Fargo also beat earnings expectations Wednesday with a nearly 50% jump in fourth-quarter net income to $5.1 billion, or $1.43 per share. Revenue came in at $20.4 billion, slightly below expectations. In the same quarter last year, Wells earned $3.4 billion, or 86 cents per share, on revenue of $20.5 billion.

In September, Wells Fargo agreed to work with US banking regulators strengthen its management of financial crime risks, including internal controls related to suspicious activities and money laundering. The deal came just seven months into the Biden administration. lifted a consent order on the bank in place since 2016 following a series of scandals, including the opening of false customer accounts.

Wells rose 5.3% in early trading.

Citigroup rose 5.7% and Goldman Sachs rose 5.4% after both banks beat Wall Street profit forecasts. Goldman said its global banking and markets businesses generated nearly $35 billion in revenue, driven by strong performance in equities and investment banking.

Goldman claimed to lead all global companies in mergers and acquisitions in 2024.