JPMorgan misses fourth-quarter profit estimates as bond trading slumps
JPMorgan Chase & Co. missed profit estimates for the fourth quarter as a slump in bond trading revenue overpowered strong consumer loan growth and record revenues.
It was the first time JPMorgan Chase, the largest U.S. bank by assets, has underperformed earnings-per-share expectations in 16 quarters, according to Barclays equity analyst Jason Goldberg.
JPMorgan was the second large U.S. bank to point the finger at choppy markets in December for its bond revenue losses. Citigroup on Monday posted a sharp drop in fixed income revenue, blaming widening credit spreads, or the premium investors demand, for holding corporate bonds over safer U.S. Treasury securities.
Goldman Sachs and Morgan Stanley, which report earnings later this week, are likely to say they experienced the same effects in their large fixed-income trading businesses.
Well Fargo & Co., which relies less on trading, said on Tuesday that fourth-quarter revenue missed expectations as revenue across all its banking units declined, especially at community banking.
Despite an 18-percent-drop in JPMorgan's quarterly fixed-income revenue, Chief Financial Officer Marianne Lake said one down quarter does not make a trend.
“The outlook for growth in the economy is still strong,” she said on an analyst call. “The consumer is still strong and healthy. We are expecting to see maybe slower but still global growth going forward.”
The bank increased its provision for credit losses by 240 million U.S. dollars from a year earlier, with roughly two-thirds for commercial and industrial loans.
Its shares were up 1.3 percent to 102.30 U.S. dollars on Tuesday.