Fortress mentality

15 January 2021 By John Foley Follow @johnsfoley

JPMorgan is awash with funding, raised $2 trln for clients in 2020 and is set to buy back shares. Yet its new loans were mostly backstopped by the government or made to rich clients. Tough rules and bailouts have left banks with strong balance sheets that aren’t being put to use.

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JPMorgan on Jan. 15 reported $11.8 billion of earnings applicable to common shareholders for the fourth quarter, 45% higher than a year earlier, as it drew down on its reserves laid aside to cover bad debts. Earnings per share of $3.79 beat analyst forecasts of $2.67, according to Refinitiv. Revenue of $30.2 billion was up 3% year-on-year.

The lender run by Jamie Dimon released $2.9 billion of so-called provisions for credit losses. That was partly offset by a $1.1 billion charge to cover actual bad debts. It left the bank at the end of the year with accumulated provisions of $30.7 billion, more than twice the level of a year earlier.

Dimon said that the bank had a record year for revenue and earnings, and pointed out that JPMorgan raised “over $2 trillion” of credit and capital for clients. Total loans were flat year on year, at $985 billion.

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