JPMorgan Chase Q4 Results Top Estimates; Shares Fall 6%

JPMorgan Chase & Co. (JPM) delivered solid 4Q 2021 results, with both EPS and revenue topping the consensus estimates. JPM benefited from elevated capital markets activity and a pick-up in lending activities. On January 14, JPM stock exited the market at $157.89, a decline of 6.15%.

JPMorgan is a U.S. company that provides financial and investment banking services. It operates through Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking, and Asset & Wealth Management segments.

Financial Performance in 4Q

The company delivered Q4 revenue of $30.3 billion, up 1% year-over-year and exceeded consensus estimates of $29.9 billion. Non-interest revenue dropped 1% year-over-year to $16.6 billion, driven by lower revenue in Corporate Investment Banking (CIB) markets and Home Lending.

Net income landed at $10.4 billion, down 14% year-over-year due to higher non-interest expense. Diluted earnings per share (EPS) stood at $3.33, better-than consensus estimates of $3.01. Net interest income moved up by 3% year-over-year to $13.7 billion, driven by balance sheet growth but partially offset by lower interest income in CIB markets.

Net income on the Consumer & Business Banking segment fell 2% to $4.2 billion, as net revenue fell 4% to $12.3 billion. The Corporate & Investment Bank (CIB) registered a 9% year-over-year decline in net income to $4.8 billion, as net revenue of CIB fell 2% to $11.5 billion.

The Commercial Banking segment, on the other hand, posted a 38% decline in net income to $1.3 billion, driven by lower credit reserves compared to the same period last year. Net income in the Asset & Wealth Management (AWM) Segment jumped 46% to $1.1 billion as revenue grew 16% to $4.5 billion.

JPM extended credit and rose over $3 trillion in capital for consumers and institutional clients worldwide during the year. The financial services company also accelerated investments to expand its product distribution capabilities

Analysts’ Take

Last week, Goldman Sachs analyst Richard Ramsden reiterated a Buy rating on the stock, with a $194 price target implying 22.87% upside potential to current levels.

Consensus among analysts is a Moderate Buy based on 9 Buys, 4 Holds, and 1 Sell. The average JP Morgan price target of $185.79 implies 17.67% upside potential to current levels.

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