JPMorgan Profit Plunges 37%

JPMorgan Chase reported a 37% drop in earnings in the fourth quarter due to a $2.4 billion one-time charge related to the new tax law but the bank’s loan growth was strong suggesting the US consumer is in good shape.

The bank said its consumer and community banking segment, which now reaches 61 million households, grew its core loans at an 8% clip. Deposits were up 7%. Consumers’ use of credit cards were brisk, with card volume and merchant processing totaling $1.2 trillion, up 13%, Reuters reported.

The bank’s chairman and CEO, Jamie Dimon, said “2017 was a record year on many measures” and stressed that the new tax cut law will boost the economy and the bottom lines of middle-class Americans.

“The enactment of tax reform in the fourth quarter is a significant positive outcome for the country,” Dimon said in a statement.

The bank reported adjusted earnings of $1.76 per share for the final quarter of 2017, topping estimates by 7 cents. Excluding special items, earnings per share was $1.07. Its revenue of $25.45 billion also topped forecasts. The bank’s shares were unchanged in pre-market trading.

JPMorgan’s net income was $4.23 billion, down nearly 40% from $6.73 billion in the same period a year ago. However, if the negative impact from the charge related to the new tax law is excluded, the bank said its net income would have been $6.7 billion.

The one-time tax-related charge was not unexpected. Analysts expected the writedown and say investors should instead focus on the economic and business benefits the bank will derive from the government trimming the corporate tax rate to 21% from 35%.