Why is JP Morgan Chase’s stock sinking? JPM shares fall 4%

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Why is JP Morgan Chase’s stock sinking? JPM shares fall 4%

 Why is JP Morgan Chase’s stock sinking? JPM shares fall 4%
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Highlights

  • JP Morgan Chase & Co. (NYSE: JPM) announced its fourth quarter and full-year 2021 results Friday.
  • Average loans increased by 6%, and average deposits increased by 16% in Q4, 2021.
  • The net income came in at US$10.4 billion in Q4, 2021, down 14% from the previous year.

 

JP Morgan Chase & Co. (NYSE: JPM) announced its fourth quarter and full-year 2021 results on January 14. The stock had plunged 3.95% at 8:27 am ET in pre-market. It traded at US$161.58.

The company posted a revenue of US$29.26 billion for the fourth quarter of 2021 compared to US$29.34 billion in Q4, 2020. Its net income came in at US$10.4 billion, a decrease of 14% compared to US$12.13 billion in the same quarter of the prior year. The earnings per share was US$3.33 per share diluted in Q4, 2021, versus US$3.79, in the corresponding quarter of the previous year.

The return on equity (RoE) was reported to be 16%, and the return on tangible common equity (ROTCE) was 19% in the fourth quarter, 2021.

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The company reported average loan growth of 6%, and the average deposits increased by 16% in Q4. Its net interest income was US$13.7 billion, and non-interest revenue was US$16.6 billion.

JP Morgan reported credit costs net benefit of US$1.3 billion, including a US$1.8 billion net reserve release. It booked net charge-offs of US$550 million. The bank reported a net income of US$48.3 billion or US$15.36 per share for full-year 2021.

Segment-wise:

In the fourth quarter, the consumer & community banking (CCB) segment revenue was US$12.28 billion, 4% down YoY, corporate and investment bank (CIB) segment generated US$11.3 billion, 2% up over the previous year. Commercial banking (CB) contributed US$2.6 billion with a 6% rise YoY, and asset and wealth management (AWM) revenue was US$4.47 billion, up 16% YoY.

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JP Morgan Chase (JPM) announced results, stock fell 4%

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New York-based JPMorgan Chase is one of the largest financial firms in the US. Its IPO came in 1969.

As of December 31, 2021, it had US$3.7 trillion in assets and US$294.1 billion in shareholder equity. The company offers financial services through its four segments which are consumer and community banking (CCB), corporate and investment banking (CIB), commercial banking (CB), and asset and wealth management (AWM). It operates in multiple countries and serves clients in the US and worldwide.

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The company has a market capitalization of US$497 billion with a P/E ratio of 10.64 and a forward one-year P/E ratio of 11.23. With a dividend yield of 2.37%, its annualized dividend is US$4.00. 

The JPM stock moved in the range of US$172.96 to US$127.35 in one year. It closed at US$168.23 on January 13. The stock rose 19.1% in one year.

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Bottom line

The result topped the estimates, yet the stock is falling. This year will see monetary policy tightening and hikes in interest rates to keep inflation in check. Bank stocks may seem beneficial at this point. One must do proper research before selecting a stock for investment. 

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