JPMorgan is sliding after booking its worst quarter for bond trading since the financial crisis

Getty ImagesJPMorgan CEO Jamie Dimon
  • JPMorgan‘s fourth-quarter profit grew massively, but still missed Wall Street estimates.
  • Last year’s profits were impacted by the passage of the new tax code.
  • Watch JPMorgan trade live.

JPMorgan was sliding, down nearly 3%, early Tuesday after posting worse-than-expected profits for the fourth quarter.

The nation’s largest bank by assets said it earned $US7.07 billion, or $US1.98 per share. That’s up from $US4.23 billion, or $US1.07 per share a year ago, but is lower than Wall Street consensus of $US2.20 per share, according to FactSet.

Last year’s profits were impacted by the enactment of the Tax Cuts Act, which led many big banks to write off billions of dollars. In the fourth quarter of 2017, JPMorgan took a $US2.4 billion charge due to the passage of the new tax code, according to the bank.

Meanwhile, the bank’s revenue grew 4% on a yearly basis to $US26.8 billion, which is in line with Wall Street estimate. The bank said its bond-trading revenue fell 16% to $US1.9 billion, the lowest level since the financial crisis, due to challenging market conditions.

“2018 was another strong year for JPMorgan Chase, with the Firm generating record revenue and net income, even without the impact of tax reform,” said CEO Jamie Dimon in the press release.

“Our customer-centric business model has benefited from a healthy and engaged U.S. consumer that is spending, saving and investing. We continue to outpace the industry in consumer deposit growth, albeit slower, and client investment assets increased for the year on record net new money flows.”

JPMorgan’s earnings have “lots of pluses and minuses”, analysts at Credit Suisse said in a note out on Tuesday.

They added:”(i) Revenue in line in aggregate despite shortfalls in trading and asset management-that’s a positive; (ii) expenses above forecast as investment spending continued to be prioritised (not surprising); (iii) credit costs were above forecast ($US0.06 per share relative to forecast) with net charge-off dollars lower with ‘select’ C&I downgrades driving more loan loss reserve build-this will be a potential concern-is this simply “normalization”/ worth more discussion on the conference call; and (iv) higher tax rate cost $US0.05 per share.”

JPMorgan was down 12% in the past year.

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