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James Li
James Li
Articles (694)  | Author's Website |

Warren Buffett’s JPMorgan Chase Reports 1st Earnings Miss in 4 Years

Geopolitical headwinds result in lower investment bank and asset management revenues

January 15, 2019 | About:

JPMorgan Chase & Co. (NYSE:JPM), a major Warren Buffett (Trades, Portfolio) bank holding, said fourth-quarter 2018 net earnings were $1.98 per share, down 22 cents from the consensus estimate of $2.20. This marked the New York-based bank’s first miss in four years.

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Investment bank and asset management revenue suffers on geopolitical headwinds

JPMorgan Chase reported corporate and investment bank revenues of $7.237 billion, down approximately $1.568 billion from the prior quarter. Chief Financial Officer Marianne Lake said during the earnings call that while the bank reported higher banking revenues, market revenues declined 6% year over year on several headwinds, including trade concerns and global slowdown fears. Such factors, which increased market volatility during the end of 2018, produced revenue declines in fixed income, credit trading, rates and commodities.

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Lower market levels also led to a 5% revenue decline in JPMorgan’s asset and wealth management segment. Assets under management of $2 trillion and client assets of $2.7 trillion were both down 2% year over year.

Stock falls but then rises

While shares of JPMorgan Chase traded at an intraday low of $98.78, down 2.16% from the previous close of $100.96, the stock rebounded to approximately $102.20 around 11:10 a.m. Eastern.

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GuruFocus lists several positive signs for the bank, including a price-book ratio near a 52-week low and a price-sales ratio near a two-year low. Despite this, JPMorgan’s price-book ratio of 1.47 underperforms 75% of global competitors, which include Buffett’s other top bank holdings like Bank of America Corp. (NYSE:BAC) and Wells Fargo & Co. (NYSE:WFC).

Other gurus with large holdings in JPMorgan include Dodge & Cox, PRIMECAP Management (Trades, Portfolio) and Chris Davis (Trades, Portfolio).

Disclosure: No positions.

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About the author:

James Li
I am an editorial assistant and researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

Visit James Li's Website


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