JPMorgan Chase closed out a bumper year that yielded a record $48.3 billion in profit in 2021, while reporting lower quarterly earnings despite the performance of investment bankers who raised money for companies and arranged corporate deals.
The bank, the country’s largest by assets, reported flat revenue compared with the final quarter of 2020, although profit fell 14 percent to $10.4 billion in the three months ending in December. Even so, its earnings of $3.33 a share surpassed analysts’ expectations.
Much of the decline was a result of the bank raising pay and spending more on technology, the company said in its earnings statement.
“The consumer is in really good shape” despite potential challenges from the Omicron variant and inflation, Jamie Dimon, JPMorgan’s chief executive, told analysts on a conference call. “Businesses, equally, are in very good shape.”
The company’s investment bankers capped a blockbuster year with a 37 percent jump in fees, while revenue for the banking unit surged 28 percent to $5.3 billion. Its asset and wealth management division also benefited from higher management fees and growth in deposits and loans.
But there were also laggards: Profit for the bank’s consumer division, which caters to Main Street customers, fell 2 percent to $4.2 billion. Revenue from trading fell 11 percent from a record fourth quarter a year ago, to $5.3 billion, but was still up compared with the same period in 2019.
Like JPMorgan, Citigroup reported lower fourth-quarter profit. Even so, its annual profit nearly doubled to $21.9 billion.
Net income slid 26 percent to $3.2 billion in the quarter, but still exceeded analyst forecasts. In an effort to streamline its business, the company is selling some overseas units. On Thursday, it announced a $3.6 billion sale of consumer operations in Indonesia, Malaysia, Thailand and Vietnam to UOB Group. It is also exiting from Mexico’s retail market.
Wells Fargo bucked the trend: Its fourth-quarter net income increased 86 percent to $5.8 billion, beating analyst expectations. Full-year profit rose to $21.5 billion in 2021, more than six times that of 2020. That year, the bank stockpiled rainy-day funds in case of a surge in loan defaults that did not materialize and was weighed down by efforts to clean up its fake accounts scandal.
“Everybody seems to be getting more and more confident that the recovery is continuing,” Michael P. Santomassimo, the company’s chief financial officer, said on a conference call. Given consumer spending and business activity, “we’re optimistic,” he said.
Bank stocks have risen 11 percent in the past month as investors predicted the Federal Reserve would raise interest rates this year to get inflation under control. Rising rates would clear a path for banks to increase profits because they can charge customers more in interest.
Executives at the nation’s biggest lenders have been upbeat about the economy in recent months, particularly during periods that the pandemic ebbed. They remained optimistic Friday, but acknowledged the potential for disruptions from rising inflation and surging coronavirus cases, which have caused staffing shortages in schools and businesses.
Inflation rose to the highest level in four decades at the end of last year. Rising prices have knocked consumer confidence and made businesses more uncertain about the future of the pandemic-stricken economy.
Three other major U.S. lenders — Bank of America, Goldman Sachs and Morgan Stanley — report their earnings next week.