Shares of JP Morgan Chase (JPM) increased in pre-market trading after the bank reported better-than-expected results in the fourth quarter. The banking giant’s earnings jumped by 58% year-over-year to $4.81 per share, surpassing Street estimates of $4.09 per share.
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Furthermore, the bank’s net revenues grew by 10% year-over-year to $43.74 billion, topping analysts’ estimates of $41.9 billion.
JPM’s NII Declines in Q4
Additionally, JPM’s net interest income excluding fixed income and equity markets, declined by 2% year-over-year to $23 billion in Q4, driven by lower rates and shrinking deposit margins across all lines of business. Looking ahead, in FY25, JPM expects its net interest income (NII) of approximately $90 billion (excluding markets), driven by “modestly higher” deposit balances.
NII is a key profitability metric for banks and financial institutions. It represents the difference between the interest earned on loans, securities, and other assets and the interest paid on deposits and other liabilities.
JPM’s Q4 Revenue Growth Driven by Fixed Income Trading
JPM’s revenue growth in the fourth quarter was driven by an increase of 20% year-over-year in fixed income trading revenues to $5 billion in the fourth quarter. In addition, investment banking fees soared by 49% year-over-year driven by higher fees across all products.
JMP’s Management Comments on the Results
Following the robust results, JP Morgan’s Chairman and CEO, Jamie Dimon commented, “The U.S. economy has been resilient. Unemployment remains relatively low, and consumer spending stayed healthy, including during the holiday season.” Furthermore, he noted that businesses remained optimistic driven by a pro-growth agenda but warned of risks like government spending, inflation, and geopolitical tensions.
Is JPM Stock a Good Buy Now?
Analysts remain cautiously optimistic about JPM stock, with a Moderate Buy consensus rating based on eight Buys, six Holds, and one Sell. Over the past year, JPM has surged by more than 45%, and the average JPM price target of $260.71 implies an upside potential of 5.4% from current levels. These analyst ratings are likely to change following JPM’s results today.
