JP Morgan Q4 - IPOs Help Noninterest Income

On Friday JP Morgan kicked off earnings season for Vestact holdings with their 4th quarter 2020 numbers. As expected the numbers were good after the previous quarters included provisions for potential Covid related defaults. Actual defaults were much lower than the provisioned value. Rather safe than sorry I suppose.

The company is incredibly profitable. They made over $12 billion in net income for the quarter. The breakdown of those profits per division makes for interesting reading. Net interest income was down 7% because of the very low interest rate environment. That is why the banks took such a large hit when Covid halted any thoughts of interest rate increases for many years to come.

But noninterest income soared 13% thanks to an incredible period for the investment banking division. There were loads of IPOs, traders were flying and assets under management grew 17%. Of their $30 billion in revenue, $16.8 billion was noninterest, while $13.4 billion came from interest income.

We have 191 clients who own JP Morgan. After a tough 2020 the stock reached the highs of January 2020 last week. Despite that, they have still underperformed most of our other stocks.

We liked JP Morgan for it's traditional banking operations and its ability to increase margins by digitising. The volatile investment banking division which now dominates earnings was not our main growth target. We are still holders of the stock and are keeping a close eye on the business and the environment it operates in.

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