JPMorgan Chase is still making money even though inflation and interest rates are rising

JPMorgan Chase posted strong fourth-quarter results Friday, including a $ 10.4 billion profit that topped forecasts. Nevertheless, JPMorgan Chase’s earnings were down 14% from the same quarter the year before when trading revenues fell.

Shares of JPMorgan Chase (JPM) fell more than 5% in early morning trading on the news.
Consumers are starting to show signs of boredom: Retail sales fell surprisingly in December. Nevertheless, CEO Jamie Dimon was optimistic about the quarterly results and 2021[ads1]’s full-year results. The bank had an annual profit of $ 48.3 billion.

“The economy continues to do quite well despite headwinds related to the Omicron variant, inflation and bottlenecks in the supply chain,” Dimon said in a statement. “Credit continues to be healthy … and we remain optimistic about US economic growth as business sentiment rises and consumers benefit from job and wage growth.”

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JPMorgan Chase and other large banks are taking advantage of rising interest rates, making their loans more profitable – and an economy that has recovered from the depths of the credit recession. Commercial lending rates have risen in anticipation of interest rate increases from the Fed this year.

JPMorgan Chase also posted strong increases in advisory fees thanks to a thriving environment for merger activity as well as strong demand for IPOs. JPMorgan Chase said that global investment banking fees increased by 37% from a year ago.

Bank shares have risen sharply so far this year and have outperformed the market over the past six months.

But rising interest rates could slow the rise. The Federal Reserve has indicated that it will raise interest rates three or even four times this year.

Dimon said in response to a question from CNN’s Matt Egan that the Fed must “thread the needle” to ensure that it can keep inflation in check and not slow down the economy too much.

However, Dimon added in a follow-up question from CNN Business that the economy is in much better shape now than in March 2020, and that we should “count our blessings” about it.

Dimon said he was not going to spend too much time worrying about what the Fed would do and when because it would be a “waste of time to do so.”

Wells Fargo tops the forecasts

Rival Wells Fargo also reported solid results on Friday. Revenues and earnings topped analysts’ expectations. The bank has taken steps to repair its public image following a series of scandals that damaged its reputation and made it the target of more scrutiny and regulation in Washington.

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“The changes we have made in the company and continued strong economic growth prospects make us feel good about how we are positioned into 2022,” Wells Fargo CEO Charlie Scharf said in a statement. “But we are also aware that we still have a multi-year effort to meet our regulatory requirements – with setbacks that are likely to continue along the way – and we continue our work to put exposures related to our historical practice behind us.”

Shares of Wells Fargo (WFC) was up over 1.5 percent.
Citigroup, which also reported earnings and earnings that topped forecasts, continues to sell assets under the supervision of the new CEO Jane Fraser. Citis stock fell 2% in early trading.
Citi said on Friday that it plans to sell its consumer banking businesses in Indonesia, Malaysia, Thailand and Vietnam to Singapore’s UOB Group for $ 3.7 billion. The agreement comes just days after Citi announced plans to exit consumer banks in Mexico.

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