JPMorgan Chase reported a decline in quarterly profit after setting aside $2.2 billion in reserves related to its agreement with Goldman Sachs to assume the Apple Card partnership.
The Wall Street giant, led by CEO Jamie Dimon, posted fourth-quarter earnings of $13 billion, or $4.63 per share — down from $14 billion, or $4.81 per share, in the same quarter a year earlier, according to a statement released Tuesday.
James Franey for The New York Post:
“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.”
“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.
MacDailyNews Note: Chase will become the new issuer of Apple Card with a transition period expected to unfold over approximately 24 months.
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I’m canceling my card….