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2019 The Most Profitable Year For Jpmorgan Driven By Surge In Trading


01/14/2020


2019 The Most Profitable Year For Jpmorgan Driven By Surge In Trading
Has not only been the best year ever for JP Morgan but also for any bank in the United States ever.
 
The profits of the company increased by 21 per cent in the fourth quarter of 2019 driven by resurgence in trading, especially in fixed income, said the company. As a consequence the annual earnings touched a record $36.4 billion for 2019.
 
However some analysts expect that the profits of the bank will get significantly reduced in 2020.
 
An active last few weeks of the year benefited the bank pushing up its fixed-income trading revenue for the fourth-quarter by $1 billion more than analysts had predicted. The company also made gains in securitized products and rates. This was significantly better that the performance of the company in the fourth quarter last year when clients stayed away because of wild market swings. That resulted in the revenues from the bond-trading unit of the bank to clock its lowest since the financial crisis last year. 
 
“They are really hitting it out of the park,” said Alison Williams, an analyst at Bloomberg Intelligence. “The other key positive, which looks more sustainable, is that interest income looks like it’s stabilizing. That was a big worry last year.”
 
However analysts and investors are beginning to question the current duration of the era of record profits despite the best year for bank stocks in over two decades. The outlook on the stocks of JP Morgan was cut to neutral last week by analysts at UBS Group AG because of a “high bar for further outperformance.”
 
However the record profits does not automatically signal that the bank has reached its peak, said Chief Financial Officer Jennifer Piepszak. The bank will continue to register more growth in the near future driven by a number of initiatives which included expansion of branches in the US, efforts at increasing market share in the fast-growing business segment of credit-cards, plans of setting foot in China and the strategy of the company to appoint investment bankers for geographical areas and sectors where the company has not been able to  penetrate as much as it would have liked.
 
“We certainly don’t think this is as good as it can be,” Piepszak said on a conference call with journalists. “We continue to see opportunities across the franchise.”
 
No annual targets for 2020 were provided by the bank. However it did say that it expects a fall in net interest income to about $14 billion in the first quarter of 2020. In the same period, the expenses of the bank will also increase by about $17 billion, the bank also said. That increase will be the highest for the bank in any quarter in the last six year.
 
During the last quarter of 2019, $4.95 billion in trading revenue was generated by the largest bank of the US which was a 56 per cent more than what the markets were expecting. This made the fourth quarter the bets for the bank in more than a decade.
 
(Source:www.bloomberg.com)