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Higher costs hit JPMorgan Chase as it reports huge 2021 profits

Published : Sunday, 16 January, 2022 at 12:00 AM  Count : 66

NEW YORK, Jan 15: Higher labor costs bit into JPMorgan Chase's fourth-quarter results, but the US bank on Friday still reported record annual profits of $48.3 billion.
The financial giant pointed to a broadly solid US economy that allowed it to release reserves it had set earlier in the Covid-19 pandemic in case of defaults, which boosted profits. It also has seen an uptick in overall lending, another sign of increasing economic activity.
Two other large banks, Citigroup and Wells Fargo, also released reserves, pointing to the healthy state of consumers and businesses that translates to low delinquencies and charge-offs. But shares of both JPMorgan and Citigroup fell as executives acknowledged an economic outlook clouded somewhat by rising inflation and lingering Covid-19 uncertainty.
"The economy continues to do quite well despite headwinds related to the Omicron variant, inflation and supply chain bottlenecks," said JPMorgan Chief Executive Jamie Dimon.
"We remain optimistic on US economic growth as business sentiment is upbeat and consumers are benefiting from job and wage growth."
Citigroup Chief Financial Officer Mark Mason said it was still "early days" on the latest coronavirus variant, but the bank is watching Omicron "and how that may impact sentiment."
On inflation, Citi's business clients are mostly able to pass on higher costs and "not really yet feeling a pinch," he said. "But again we're watching it closely and it's kind of early days to call."
At JPMorgan, fourth quarter earnings came in at $10.4 billion, down 14 percent from the year-ago period. Revenues were flat at $29.3 billion.  The quarterly results included $1.8 billion in net reserve releases from funds that were set aside earlier in the pandemic in case of bad loans.
Strong points in the report included higher investment banking fees tied to what Dimon called "unprecedented" merger and acquisition activity offset somewhat by a drop in trading revenues in some businesses. But the bank saw an 11 percent jump in fourth-quarter expenses, with much of it due to higher labor costs. Chief Financial Officer Jeremy Barnum pointed to "somewhat elevated attrition" in the workforce that has resulted in wage hikes.    AFP

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