The bank expects full-year NII of US$90 billion. That was higher than estimates of US$86.2 billion, according to LSEG data. In the quarter, NII rose 19 per cent to a record of US$24.2 billion.

Shares hit record-high after markets open but corrected during trading hours and were flat.

CEO Jamie Dimon reiterated his view that the US economy was steady, but warned that inflation could be more persistent than expected and rates higher for longer.

“The US economy continues to be resilient, with consumers still spending, and markets currently expect a soft landing. It is important to note that the economy is being fuelled by large amounts of government deficit spending and past stimulus,” Dimon said.

Despite the dip in quarterly profit, analysts cheered the results.

“They had a really good 2023 so it will be difficult to repeat that but they have been building their reserves, focusing on capital and working at keeping the fortress balance sheet that way while remaining cautious but constructive,” said Stephen Biggar, an analyst at Argus Research.

INVESTMENT BANKING ‘ROBUST’

The pipeline for its investment banking unit is “robust” due to a more dovish interest rate environment, chief financial officer Jeremy Barnum said, but warned of persisting uncertainty which could affect its pipeline as headwinds remain.

Despite global merger and acquisition activity falling to a decade low last year, some signs of recovery appeared in the fourth quarter as industry-wide deal volumes climbed 19 per cent, according to Dealogic.

Investment banking fees climbed 13 per cent in the quarter, helped by strong equity and debt underwriting fees. Fixed income markets revenue also rose 8 per cent.

Profit for the fourth quarter was US$9.31 billion, or US$3.04 per share, for the three months ended December 31, the bank said on Friday. That compares with US$11.01 billion, or US$3.57 per share, a year earlier. Annual earnings hit a record US$49.6 billion.

The bank reported a 12 per cent jump in revenue to US$38.57 billion.

“Overall, another solid quarter from JPM, as the firm utilised abnormally low credit costs to slightly reposition its securities portfolio and absorb the expected FDIC charges,” David George, analyst at Baird Equity Research, said in a note.

Average deposits were flat compared with the prior quarter. Depositors have moved their money out of banks in search of higher-yielding alternatives like money market funds and this trend is likely to continue even in a low-rate environment, Barnum warned.

US consumer finances remain largely healthy, the bank said, adding that consumer credit metrics across the portfolio had “normalised.” Net charge-offs – debt owed to a bank that is unlikely to be recovered – increased to US$2.2 billion in the fourth quarter.

Even though overall loan growth is expected to remain muted, improvement in credit cards is expected to continue but not at the same pace as in 2023, said Barnum.

BASEL PUSHBACK

The CFO once again highlighted that the draft regulations on capital could prompt lenders to pull back and stymie economic growth and also suggested that taking action against banking regulators could be considered.

“We’re not going to get that specific about potential litigation strategy at this point. But obviously, you know, suing your regulator is never your preferred option. But it can’t be taken off the table when you’re talking about something of this seriousness,” Barnum told reporters.

Dimon has also previously blasted stricter capital rules proposed by US regulators.

The issue also came up at a Senate hearing last month, when big bank CEOs rejected the proposals for more onerous capital rules known as the Basel III endgame. If implemented, they could increase JPMorgan’s capital requirements by US$50 billion, the bank has warned previously.

Federal Reserve officials are considering possible adjustments to the proposal, the central bank’s supervision chief said on Tuesday.