JPMorgan after report

JPMorgan Chase (JPM) shares fell sharply on Friday, even though the biggest US bank posted earnings per share and final quarter 2021 earnings above Wall Street forecasts. Investors were disappointed by the bank's drop in trading revenue, rising costs and partly forecasts for 2022.

Shares in JPMorgan Chase (JPM), up 19% over the past year, fell sharply by 6.15% on Friday after the biggest US bank by market capitalisation released its financial report.

JPMorgan posted Q4 2021 earnings of $3.33 per share, above market analysts' average forecasts of $3.01.

Quarterly earnings rose to $30.35bn, also above Wall Street estimates.

The bank reported an increase in loan income. The investment banking division increased revenues by 28% to $3.2 billion compared with the fourth quarter of 2020, thanks to higher commissions on corporate mergers and acquisitions and initial public offerings.

Disappointingly, trading revenues fell by as much as 13% after a record quarter last year. Fixed-income trading revenues fell 16% to $3.3 billion, while stock market revenues fell 2% to $2 billion.

During Q4, JPMorgan's expenses jumped 11% to nearly $18 billion, mainly due to higher staff pay.

Meanwhile, JPMorgan Chief Financial Officer Jeremy Barnum said during the report that JPMorgan's expenses will increase by 8% to about $77bn in 2022, driven by "inflationary pressures" and $3.5bn in investments.

He also said that JPMorgan expects a "slight normalisation" in investment banking revenues in 2022, but added that overall deal flow will remain stable. The CFO also reiterated this forecast of "some normalisation" on expected market revenues, also noting that he still expects these revenues to remain above 2019 levels.

Nevertheless, JPMorgan's overall outlook for 2022 was optimistic. In addition, the bank will benefit significantly from the upcoming interest rate hike by the central bank.

The bank said it expects net interest income, excluding fixed income and equity markets divisions, of $50 billion in 2022, up from $44.5 billion in 2021. This is higher than analysts had expected.

The bank's full-year 2021 profit rose to $48.3 billion from $29.1 billion in 2020.