What is JP Morgan's greatest weakness

JPMorgan: Gushing earnings thanks to stocks and bonds

JP Morgan has opened the numbers of US banks positively. The largest US bank made a profit jump of more than 40 percent in the fourth quarter and thus significantly exceeded the expectations of the analysts. The main growth driver was a flourishing share and bond trade. Before the trading session, the share lost 0.8 percent - probably true to the stock market adage “sell on good news”.

Specifically, JPMorgan generated a quarterly profit of $ 12.1 billion or $ 3.79 per share - a profit of $ 2.67 per share was expected. A year earlier it had reported quarterly earnings of $ 2.57 per share. Sales were also above the estimates of Bloomberg surveyed analysts: The largest bank in the country reported revenues of 30.2 billion dollars for the last quarter of the year, and exceeded the expectations of the experts - they had an average of 28.7 billion dollars on their slips of paper.

The growth was driven by the Wall Street business: income from trading stocks, bonds, currencies and commodities was literally bubbling up. On the other hand, however, interest income fell.

In addition, JP Morgan benefited from lower risk provisioning for loans at risk of default: instead of putting more money aside for loans at risk, as analysts expected, the bank even released billions in provisions.

Even without this step, the company would have increased its quarterly profit more than experts expected. In the year as a whole, however, the consequences of the corona crisis had a more significant impact. Because the bank had already set aside a double-digit billion sum for loan defaults in the first nine months, the surplus fell year-on-year by a fifth to $ 29.1 billion.

Even if there should be (stronger) profit-taking today - JPMorgan is number 1 in the USA and has a strong presence in both investment banking and pure lending business. In addition, the outlook for the markets in 2021 is good. Conclusion: New investors use periods of weakness to buy. Invested let the profits of the old recommendation of the SHAREHOLDER continue.

(With material from dpa-AFX)