Banking stock to watch: JPMorgan Chase & Co. (NYSE: JPM)

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JPMorgan Chase & Co. (NYSE: JPM) stock fell over 0.7% in the pre-market session of January 15th, 2020 (Source: Google finance) post the fourth quarter of FY19 update. JPMorgan’s net interest income fell 1% to $14.17 billion in the fourth quarter, which is its first decline since the third quarter of 2015, just before the Fed began a series of nine rate increases. As the rates expected to hold steady in 2020, the bank might face questions about keeping returns high and whether to reduce its expenses, which have been growing. Total expenses rose 4% to $16.34 billion in the quarter. Return on tangible common equity, was 17% in the fourth quarter, compared with 14% a year ago.

Moreover, in the fourth quarter, the biggest growth came from its corporate and investment bank, where profit grew 48% to $2.93 billion, with the trading business improving from a weak year-ago quarter. The Revenue from fixed-income trading, grew 86% to $3.45 billion, though that is less than each of the first three quarters in 2019. Equities trading revenue grew 15% from the fourth quarter of 2018, but was down from the third quarter of 2019.

JPMorgan’s consumer operation, posted the revenue growth of 3% to $14.04 billion, and profit rose 5% to $4.23 billion. Further, the credit-card loan volume increased 8% in the fourth quarter, and Chase card customers spent $204.2 billion, which is 10% more than the prior year. Card profit, however, declined 1% in the fourth quarter. The bank has set aside $1.2 billion for consumer credit losses, which represents a 10% decline. The drop reflects the release of funds it had previously set aside for potential soured consumer loans and optimism about its customers’ financial health. JPMorgan’s asset-management operations has delivered the profit of $785 million, which is up 30%, driven by increased fees and lower costs, excluding compensation. The quarter’s biggest growth came from the corporate and investment bank, where profit grew 48% to $2.93 billion, with the trading business improving from a weak year-ago quarter.

JPM in the fourth quarter of FY19 has reported the adjusted earnings per share of $2.57, beating the analysts’ estimates for the adjusted earnings per share of $2.35, according to analysts polled by FactSet. The company had reported the adjusted revenue growth of 9 percent to $28.33 billion in the fourth quarter of FY19, beating the analysts’ estimates for revenue of $27.87 billion.

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