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JPMorgan Traders Notch Record Fourth Quarter on Volatility

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(Bloomberg) -- JPMorgan Chase & Co.’s traders scored their biggest fourth-quarter haul ever, boosted by volatility tied to the US elections in November. 

Trading revenue at the firm rose 21% from a year earlier, jumping to $7.05 billion. Fixed-income was the star, with revenue beating analysts’ estimates, while equities-trading revenue fell short. 

The top five US banks were expected to round out 2024 with a combined 15% increase in trading revenue to $24.5 billion, the highest fourth quarter in at least five years. Results were buoyed by strong demand from investors making bets on the impact of the US vote and the incoming Trump administration.

The trading results and higher-than-expected net interest income fueled a 50% profit surge, to $14 billion for the quarter. The firm once again notched the highest annual profit in the history of American banking — $58.5 billion — beating its own record from 2023. 

“The U.S. economy has been resilient,” Chief Executive Officer Jamie Dimon said in a statement Wednesday. “However, two significant risks remain. Ongoing and future spending requirements will likely be inflationary, and therefore, inflation may persist for some time. Additionally, geopolitical conditions remain the most dangerous and complicated since World War II.”

Shares of JPMorgan, up 48% in the past 12 months, gained 1% at 9:58 a.m. in New York. 

The biggest US lender kicks off fourth-quarter big bank earnings Wednesday along with rivals Goldman Sachs Group Inc., Citigroup Inc. and Wells Fargo & Co. The Federal Reserve’s rate cuts beginning in September, the US elections’ impact on trading and executives’ outlooks on rates and dealmaking are all top of mind for investors.

The trading total got a boost from a 22% climb in equities and a 20% jump in fixed income. 

Net interest income dropped 3% but still surpassed expectations, coming in at $23.4 billion in the quarter. The company said this year’s haul could be about $94 billion, more than analysts had been expecting, which was $91.3 billion on a managed basis and $89.8 billion on a reported basis. 

JPMorgan did a U-turn on 2025 NII guidance in the quarter. In October, Chief Financial Officer Jeremy Barnum said the $87 billion consensus estimate at the time was “a little toppy.” By December, the interest-rate outlook was higher, and Marianne Lake, who runs the lender’s sprawling consumer unit, told investors that 2025 NII could come in about $2 billion higher. 

JPMorgan’s fourth-quarter investment-banking fees rose 49% to $2.48 billion. Advisory fees and equity underwriting both surpassed expectations, though debt underwriting fell short.

Non-interest expenses for the fourth quarter came in at $22.8 billion, better than expected. Adjusted expenses this year could come in around $95 billion, according to a company presentation, boosted by volume- and revenue-related expenses, growth initiatives, technology and marketing. 

(Updates share price in sixth paragraph.)

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