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JP Morgan's Wealth, Asset Arm Logs Q4 Net Income Dip

Tom Burroughes, Group Editor , 18 January 2021

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The US-listed lender was the first of the major banking groups to report fourth-quarter results, showing a mixture of figures. AuM rose; there were mixed figures for flows into and out of long-term and liquidity products.

The asset and wealth management arm of JP Morgan, which includes its private bank, reported a fall in net income for the fourth quarter of 2020, at $786 million, against $801 million a year earlier, or down by 10 per cent. Assets under management rose, however.

Net revenues at this division rose to $3.867 billion, up by 9 per cent year-on-year, in Q4. Non-interest costs rose by 13 per cent on a year ago to $2.756 billion, JP Morgan said in a statement. Revenues were driven by higher performance and management fees as well as higher deposit and loan balances. This was offset partly by compressed deposit margins.

As is customary, JP Morgan, is the first US financial bank to report fourth-quarter results as the quarterly/full-year results cycle cranks up.

Assets under management stood at $2.7 trillion, a rise of 17 per cent, driven by cumulative net inflows into liquidity and long-term products, as well as rises in market levels. There were $33 billion into long-term products and outflows of $36 billion from liquidity products in the quarter.

In total, there were 6,876 wealth management client advisors at the end of 2020, up from 6,615 a year earlier. The wealth and asset business at the US bank had a pre-tax margin of 28 per cent. JP Morgan said it had the best full-year results ever for asset and wealth management revenue, net income, total client asset flows, among other metrics.

For JP Morgan as a whole, net income rose to $12.13 billion, from $8.52 billion a year earlier. Non-interest costs fell slightly to $16 billion, down from $16.3 billion a year earlier. As far as provision for credit losses went, there was actually a net figure of $1.9 billion, contrasting with a cost of $1.4 billion in the previous year, driven by reserves being released in the current quarter. JP Morgan, along with other banks, has been adjusting provisions to deal with expected bad loans brought about by the pandemic.

At the end of last year the bank logged a Common Equity Tier 1 capital figure of $205 billion as defined under Basel III rules about banks’ capital buffers.

“While positive vaccine and stimulus developments contributed to these reserve releases this quarter, our credit reserves of over $30 billion continue to reflect significant near-term economic uncertainty and will allow us to withstand an economic environment far worse than the current base forecasts by most economists,” Jamie Dimon, the chairman and CEO at the bank, said.

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