JPMorgan Chase posted a dip in quarterly profit as it built a $2.2 billion reserve linked to its deal with Goldman Sachs to take over a credit card partnership with Apple.
Earnings at the Wall Street giant led by CEO Jamie Dimon fell to $13 billion, or $4.63 per share, in the fourth quarter of last year, the bank said in a statement on Tuesday.
That is down from $14 billion, or $4.81 per share, from the same period a year earlier.
Excluding the one-time hit to earnings, JPMorgan’s quarterly profit increased to $14.7 billion, or $5.23 per share, fueled by trading. Shares of the bank rose 1.5% before the bell.
“The U.S. economy has remained resilient,” the bank’s CEO Dimon said in a statement. “While labor markets have softened, conditions do not appear to be worsening. Meanwhile, consumers continue to spend, and businesses generally remain healthy.”
“These conditions could persist for some time, particularly with ongoing fiscal stimulus, the benefits of deregulation, and the Fed’s recent monetary policy,” he added.
“However, as usual, we remain vigilant, and markets seem to underappreciate the potential hazards, including from complex geopolitical conditions, the risk of sticky inflation, and elevated asset prices.”
Executives across the industry have pointed to resilient consumers, backed by a strong job market and rising pay, who have propped up borrower demand and kept loan payments steady.
Markets swung sharply in the quarter as concerns about a bubble in AI stocks intensified after two years of broad gains. CEO warnings that equities were due for a correction added to investor caution.
Meanwhile, bond markets remained jittery as uncertainty persisted around when and how much the U.S. Federal Reserve would cut rates.
Market revenue at JPMorgan climbed 17% in the fourth quarter, with fixed income up 7% and equity surging 40%.
Earlier this month, JPMorgan and Apple agreed that the bank became the new issuer of the iPhone maker’s card.
The bank had said it expects to record a $2.2 billion provision for credit losses in the fourth quarter tied to the portfolio.
A credit reserve — or provision for credit losses — is money a bank effectively squirrels away as a safety net to cover loans that might go bad in the future.
JPMorgan is establishing this massive cushion now to prepare for the influx of new credit card customers from Apple, signaling it is taking a cautious approach to the new portfolio.
The deal comes at a critical juncture for the credit card industry, which could face a sharp shift if a proposal by U.S. President Donald Trump to cap interest rates at 10% moves forward.
While Trump has said he expects companies to comply by January 20, Wall Street analysts remain doubtful the measure can be implemented without congressional approval.
