Investing.com - JPMorgan (NYSE:JPM) ended 2020 on a high note, handily beating consensus forecasts for fourth-quarter earnings as the bank released previously booked credit provisions, while its investment bank made hay amid the recovery in global markets at the end of the year.
Net income rose to $12.1 billion, or $3.79 a share, in the quarter ended Dec. 31, from $8.5 billion, or $2.57/share, 12 months ago, the last quarter to be unaffected by the pandemic.
The results were inflated by the release of another $2.9 billion in credit provisions, which added $1.89 billion to the bottom line. The bank had released a net $611 million in provisions in the third quarter after taking a huge initial hit of some $8 billion at the start of the pandemic.
"We do not consider the reserve takedown of $2.9 billion to represent core or recurring profits," chief executive Jamie Dimon warned. "Essentially reserve calculations, while done extremely diligently and carefully, now involve multiple, multi-year hypothetical probability-adjusted scenarios, which may or may not occur and which can be expected to introduce quarterly volatility in our reserves."
The bank's revenue rose 3% to $30.2 billion: Noninterest revenue surged 13% to $16.8 billion, driven by trading gains and investment bank fees that were helped by a fourth quarter full of initial public offerings. That offset a 7% drop in revenue from the group's core lending business. Interest income from consumer and business lending fell 14% from a year earlier, while income from credit card and auto loans fell 7%.
JPMorgan shares are up 11% from the beginning of the year, and down just 1.1% from their 52-week high of $142.73 set on January 14. They are outperforming the S&P 500 which is up 1.1% from the start of the year. By 8 AM ET, JPMorgan shares were down 0.4% in premarket trading.
As a result of another quarter of solid profits, the bank's core tier 1 capital ratio, a key measure of financial strength, finished the year at 13.1%, up from 12.4% at the end of 2019. JPMorgan has signaled it will make immediate use of the Federal Reserve's authorization to resume dividend payments and stock buybacks. I
(CORRECTION: The original version of this story misstated the credit provisions figure. This has now been amended.)
JPMorgan follows other major Financial sector earnings this month
PNC Financial also beat expectations on Friday with fourth-quarter EPS of $3.26 on revenue of $4.21 billion, compared to forecast for EPS of $2.59 on revenue of $4.13 billion.
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