On Friday, JPMorgan Chase reported a record profit and revenue for the fourth quarter as higher interest rates and higher loan growth drove up interest income by 48%. According to the bank, profit increased by 6% to $11.01 billion, or $3.57 per share from the prior year. Revenue rose 17% to $35.57 billion, fueled by the rise in net interest income to $20.3 billion, topping the StreetAccount estimate by $1 billion, as the bank saw average loans rise 6%. In the quarter, however, the bank posted a provision for credit losses of $2.3 billion, an increase of 49% from the third quarter, exceeding the StreetAccount estimate of $1.96 billion as it set aside money for expected defaults. The company’s shares rose 1.1%. This decision was prompted by a “modest deterioration in the Firm’s macroeconomic outlook, now reflecting a mild recession in the central case,” along with loan growth from Chase credit card customers.
According to JPMorgan CFO Jeremy Barnum, the recession, in which unemployment could reach 4.9%, is expected to hit in the fourth quarter of this year. The company’s jump in credit provisioning topped rival giants Bank of America and Wells Fargo, which saw smaller increases in the quarter. While JPMorgan CEO Jamie Dimon said Friday that the U.S. economy “currently remains strong” thanks to well-financed consumers and businesses, he pointed to a series of risks to that outlook. “We still do not know the ultimate effect of the headwinds coming from geopolitical tensions including the war in Ukraine, the vulnerable state of energy and food supplies, persistent inflation that is eroding purchasing power and has pushed interest rates higher, and the unprecedented quantitative tightening,” Dimon said.