JPMorgan 4Q earnings fall 14%, but 2021 profit sets record

NEW YORK — JPMorgan Chase says fourth-quarter profits fell 14% from a year earlier, due to a weaker performance from its trading desk and higher compensation expenses for employees.

Even with the weaker quarter, JPMorgan had a record annual profit, nearly $50 billion. The total is significantly more than what the bank brought in during 2019, before the pandemic.

The bank, like others in the financial industry, also continues to deal with the impact of near-zero interest rates. Low rates have kept JPMorgan’s revenue mostly flat for the past year.

The New York-based financial giant today reported a profit of $10.4 billion, or $3.33 per share for the last three months of 2021. That’s down from a profit of $12.14 billion, or $3.79 a share, in the same period a year ago. While JPMorgan’s profits fell, the results were still better than what analysts had forecast, with the average per-share profit on FactSet being $3.01.

For the past several quarters, JPMorgan has been able to make up for flat interest rates by having a strong performance out of its investment bank and by releasing billions of dollars from its so-called loan-loss reserves. The reserves are money the bank set aside in the first months of the pandemic to cover potentially bad loans. Those loan-loss reserve releases gave the a bank several one-time boosts to its profits.

Those reserve releases have decreased during the course of the year. JPMorgan released a net $1.3 billion in loans in the fourth quarter, compared with the $4.16 billion it released in the first quarter.

Trading was weaker. The corporate and investment banks posted a division profit of $4.85 billion, down from $5.3 billion a year earlier. While the investment bankers were able to boost profits through deal-making and advisory services last quarter, trading revenues fell 17% from last year. The bank blamed a “challenging trading environment” in bonds as well as currency trading.

For the full year, JPMorgan earned a profit of $48.33 billion. That’s up from the $29.1 billion the bank earned in 2020, which was impacted by the pandemic. It’s also significantly better than what the $36.4 billion profit for 2019.