JPMorgan’s plan for big spending hike drives stocks down

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(Bloomberg) – JPMorgan Chase & Co. slipped as low as 6.4% after the company said compensation and other costs jumped in the fourth quarter ahead of an expected increase this year.

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Spending in the last three months of 2021 is up 11% from the previous year, and the company said it expects it to hit around $ 77 billion this year excluding legal fees, which would represent an increase of 8.6%. The forecast, along with worse-than-expected business results and subdued loan growth, pushed the stock to its steepest decline since June 2020.

“JPMorgan’s results have been surprisingly weak and have been hampered by unusually poor expense management,” Octavio Marenzi, CEO of consulting firm Opimas LLC, said in an email. “The real surprise came from the 5% increase in non-interest charges, which seems difficult to justify,” he said, referring to the third quarter jump.

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Shares of New York-based JPMorgan fell 5.4% to $ 159.10 at 11:16 am in New York City, reducing its gain over the past 12 months to 13%.

America’s largest bank also said it expects net interest income excluding market activities to be $ 50 billion for the full year, up from 2021. And the investment banking pipeline remained “fairly strong” in the first quarter, said Jeremy, chief financial officer. Barnum said on a call with analysts.

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Barnum said the bank had started to see a pickup in lending growth, after reporting a 1% drop in consumer and business loans from the previous year.

Citing inflation and the amount JPMorgan plans to spend on investments, Barnum said the bank was “a few years away from sub-target returns.”

Fixed income trading revenues fell 16%, worse than the 13.5% drop analysts expected. Total trading revenue fell 11% from the estimate of 9%. While the fixed income sector was the biggest loser, income from equities also fell, falling 2% to $ 1.95 billion.

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The bank saw a slight slowdown in credit card spending at the end of the last quarter, which could be the result of the increased rate of virus cases, Barnum said on a conference call with reporters.

Still, the company’s negotiators had their best quarter ever in a booming M&A market. M&A expenses rose 86% in the fourth quarter to $ 1.56 billion, higher than analysts’ estimates, helping to push the company’s net profit to $ 10.4 billion, from $ 9 billion. expected dollars.

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