JPMorgan Chase closed out the most profitable year in U.S. banking history with its seventh consecutive quarter of record net interest income and a surprise forecast that the windfall may continue this year.
NII came in at $24.2 billion in the final three months of the year, the company said in a statement Friday. The haul for all of 2024 may rise to about $90 billion, according to the bank, while analysts had been expecting a 2% drop.
"Our record results in 2023 reflect over-earning on both NII and credit, but we remain confident in our ability to continue to deliver very healthy returns even after they normalize," CEO Jamie Dimon said in the statement.
JPMorgan and its largest peers — Bank of America, Citigroup and Wells Fargo — are all reporting results Friday, offering a look at how the economy held up in the last three months of the year. Investors are also keen for details on what executives are expecting for the year ahead as they reckon with the Federal Reserve's policy pivot from two years of boosting interest rates.
JPMorgan's $9.3 billion of net income in the fourth quarter of 2023 means the biggest U.S. bank made $49.6 billion for the year, up 32% from 2022 and topping a record $48.3 billion from 2021.
Results from the biggest U.S. bank included a $2.9 billion charge tied to the failures of Silicon Valley Bank and Signature Bank. The Federal Deposit Insurance Corp. levied a special assessment to backstop uninsured depositors at those firms after they collapsed last year. JPMorgan had warned that it would take the charge, which it previously estimated at around $3 billion.
The bank spent more than analysts estimated in the fourth quarter as Dimon warned that inflation could last longer than many investors anticipate. Expenses climbed to $24.5 billion, a jump of 29%. Beyond the FDIC special assessment, JPMorgan cited higher compensation for the increase. The bank's outlook for adjusted expenses this year is about $90 billion, according to a presentation on its website.
Dimon said the need for increased government spending on the green economy, the military and the restructuring of global supply chains "may lead inflation to be stickier and rates to be higher than markets expect."
Markets revenue climbed slightly, beating expectations, with the 8% gain fixed-income traders notched more than offsetting an 8% drop on the equities side. Investment banking revenue climbed 13% but came in below estimates as a beat in equity underwriting was more than offset by misses in debt underwriting and advisory.
Net charge-offs were $2.2 billion, more than expected, driven by the firm's credit card business and "single-name exposures in wholesale which were largely previously reserved." JPMorgan added $598 million to the pile of money set aside for soured loans, also mostly tied to cards.
The results also included $743 million in net investment securities losses.
