JPMorgan Q4: Apple Card Hit, IB Slip, NII Strong
Key Points
- JPMorgan’s Q4 profit fell 7% to $13B after a $2.2B Apple Card reserve build
- Adjusted EPS of $5.23 beat forecasts, driven by strong trading and NII
- Investment‑banking fees dropped 5%, missing the bank’s own guidance
- Dimon calls the U.S. economy resilient but flags underappreciated risks
Earnings headline: one‑time Apple Card charge masks profit growth
JPMorgan Chase opened U.S. bank earnings season with mixed fourth‑quarter 2025 results that combined solid underlying performance with notable one‑offs. Reported net income was $13.0 billion, or $4.63 per share, down about 7% from a year earlier as the bank booked a $2.2 billion reserve build tied to its forward purchase of Apple’s credit card portfolio from Goldman Sachs. That reserve, recorded as loan‑loss provisions, reduced earnings by roughly $0.60 per share. Excluding the Apple Card impact, adjusted net income was about $14.7 billion and earnings per share were $5.23, beating analyst expectations that ranged around $4.85–$5.05. Several outlets noted that some forecasts had not been updated for the Apple Card deal announced the prior week. Revenue for the quarter rose 7% year over year to roughly $45.8–$46.8 billion, modestly ahead of most estimates, as higher net interest income and strong markets revenue offset weaker investment‑banking fees.
Business mix: strong trading and NII, weak investment banking
The quarter underscored a sharp divergence across JPMorgan’s businesses. Net interest income, driven by higher yields and an 11% year‑over‑year increase in total loans, climbed 7% to about $25 billion. Management guided total 2026 net interest income to roughly $103 billion, with NII ex‑Markets around $95 billion. Markets revenue was a standout: total trading revenue jumped 17% to about $8.2 billion, with fixed‑income up 7% to $5.38 billion and equities up 40% to $2.86 billion, exceeding the bank’s own expectations of low‑teens growth. By contrast, investment‑banking performance disappointed. Total IB fees fell 5% to $2.35 billion, missing guidance for a low‑single‑digit increase. Advisory fees slipped 3%, while debt and equity underwriting fees declined 16% and 2%, respectively; debt underwriting in particular posted a surprise 2% drop where analysts had expected a strong gain. CFO Jeremy Barnum said some deals were pushed into 2026 and acknowledged the bank’s execution “was not what we would have liked.”
Segment results, Apple Card impact and expense outlook
Across major segments, results were mixed but generally positive. In Consumer & Community Banking, net income was $3.6 billion, or $5.3 billion excluding the Apple Card reserve build, on revenue of $19.4 billion, up 6% year over year. Management highlighted resilient consumer behavior, with debit and credit card sales volume up 7% and 1.7 million net new checking accounts and 10.4 million new card accounts added over the year. In the Corporate & Investment Bank, net income reached $7.3 billion and revenue $19.4 billion, up 10%, driven by markets, payments and securities services, even as IB fees declined. Asset & Wealth Management delivered $1.8 billion of net income on $6.5 billion of revenue, up 13%, supported by higher management and performance fees and strong net inflows. The Apple Card transaction had significant capital and balance‑sheet effects. The reserve build in consumer banking was accompanied by an increase of about $23 billion in standardized risk‑weighted assets and roughly $110 billion on an advanced basis, which management expects to fall to around $30 billion in the near term. JPMorgan ended the quarter with a standardized CET1 ratio of 14.5%, down 30 basis points sequentially as capital distributions and higher RWA more than offset net income. Expenses rose 5% year over year to about $24 billion in the quarter and are guided to roughly $105 billion for 2026, reflecting higher compensation, front‑office hiring, technology, payments, AI and branch investments, partly offset by the release of an FDIC special assessment accrual.
Macro view, policy tensions and credit‑card risks
CEO Jamie Dimon described the U.S. economy as “resilient,” noting that while labor markets have softened, conditions do not appear to be worsening, consumers continue to spend and businesses generally remain healthy. He said these conditions could persist, citing ongoing fiscal stimulus, deregulation and recent Federal Reserve policy, but warned that markets “seem to underappreciate the potential hazards,” including complex geopolitical conditions, sticky inflation and elevated asset prices. The quarter unfolded against an unusual political backdrop. President Donald Trump has called for a one‑year national cap of 10% on credit‑card interest rates starting January 20 and has supported related legislation. JPMorgan executives pushed back, with CFO Jeremy Barnum arguing that such caps would likely reduce the supply of credit rather than lower its price and would be “very, very negative” for the bank’s card business, though he said it was too early to quantify the impact. At the same time, the Trump administration’s Justice Department has launched a criminal investigation into Fed Chair Jerome Powell over a Fed construction project. Dimon publicly defended Powell and emphasized the importance of Federal Reserve independence, saying he has “enormous respect” for the chair and warning that efforts to weaken the Fed could ultimately lead to higher interest rates.
Key Takeaways
- JPMorgan’s headline profit decline was driven by a deliberate $2.2B Apple Card reserve build, while underlying earnings and revenue grew solidly.
- Trading and net interest income are offsetting a weaker investment‑banking environment, with markets revenue far exceeding internal and external expectations.
- Management is committing to higher spending, especially on technology and growth initiatives, even as political scrutiny of credit cards and the Fed adds new uncertainties.
References
- 1. https://mlq.ai/news/jpmorgan-chase-reports-9-rise-in-adjusted-fourth-quarter-profits/
- 2. https://finviz.com/news/274559/jim-cramer-on-jpmorgan-my-suggestion-is-wait-to-see-if-jamies-worried-cautious-even-pessimistic
- 3. https://www.chartmill.com/news/JPM/Chartmill-39870-JPMorgan-Chase-Co-NYSEJPM-Posts-Mixed-Q4-2025-Results-with-EPS-Beat-and-Revenue-Miss
- 4. https://www.marketbeat.com/instant-alerts/jpmorgan-chase-co-nysejpm-releases-quarterly-earnings-results-beats-expectations-by-030-eps-2026-01-13/
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