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JPMorgan shares fell as bank lowers profit forecast

By Shubhangi on Jan 15, 2022 | 04:35 AM IST

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JPMorgan reported a 14% drop in the fourth quarter profit compared with a year ago

JPMorgan said its ROTCE may fall below 17% this year

JPMorgan Chase & Co (NYSE: JPM) shares fell as much 6% on Friday as analysts were disappointed with the bank’s forecast for future profitability.

The largest bank of the country reported a 14% drop in the fourth quarter profit compared with a year ago, as the trading revenues fell.

JPMorgan posted a profit of $10.4 billion, or $3.33 per share, in the quarter, compared to analysts’ expectations of $3.01 per share.

Also Read: Wells Fargo reports 86% increase in quarterly profits

The bank said its return on tangible capital equity (ROTCE), used to estimate how shareholder’s money is used to produce profit, may fall below 17% this year.

JPMorgan attributed the fall in ROTCE to a slowdown in capital markets activity, rising expenses due to inflation and higher labor costs.

Shares of JPMorgan fell 5% in mid-morning trading as investors were disappointed by the guidance.

Fed's measures

Stimulus measures by Federal Reserve in the last year produced more liquidity in equity and fixed income markets, which had resulted in increased trading activity.

Also Read: US retail sales plunge 1.9% in December amid Omicron variant concerns

In November, though, the Fed reduced its assets purchased which led to lower trading volumes.

During the quarter, markets revenue fell by 11%, while fixed income markets revenue and equity markets revenue were down by 16% and 2% respectively.

Picture Credits: Reuters

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