Monday, January 24, 2022

JPMorgan’s profit dips as talent shortage on Wall Street pushes costs higher

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JPMorgan Chase’s quarterly profit fell 14 percent despite a surge in investment-bank payments as sales revenue declined and payroll costs rose amid a talent shortage on Wall Street.

Chief Financial Officer Jeremy Barnum said the bank is facing “winds” as the volatility in the stock and bond markets stabilizes in 2020, which has eroded trading revenues. But he also highlighted the cost of retaining employees as bankers increasingly fell into the workplace and demanded fatter bonuses.

“It’s true that labor markets are tight, labor inflation is a bit low, and it’s important for us to attract and retain the best talent,” Barnum told reporters at a conference.

The comments came at a time when the struggle for talent is heating up as major banks raised salaries to record levels this year. Throughout the deals, the investment bank increased its earnings, but at the same time led to great fatigue among analysts and partners.

JPMorgan said its operating expenses rose 11 percent last year to $ 17.9 billion as the bank lost higher wages.

According to FactSet, the country’s largest bank reported a profit of $ 10.4 billion in the fourth quarter, or $ 3.33 per share, on Friday morning, beating analysts ’estimate of $ 3.01 per share. exceeded expectations.

In the fourth quarter, JPMorgan Investment Bank again became a show star. Consulting fees have risen 37% as deals, IPOs and M&A remain hot.

Profits from asset and asset management increased by 18%, in part due to the growth of managed assets. Amid growing uncertainty over the pandemic, sales revenue rose 13 percent.

“The economy continues to grow very well despite the reverse winds associated with the Omicron option, inflation and supply chain hurdles,” Dimon wrote in a press release. “Credit remains healthy with very little net settlement, and we remain optimistic about U.S. economic growth.”

“The economy is doing much better despite the reverse winds associated with the Omicron option, inflation and supply chain problems,” Jamie Dimon said.

JPMorgan was also fined $ 200 million for failing to archive employee messages on work-related issues in the fourth quarter. For years, JPMorgan employees – from analysts to top executives – have used personal devices to discuss company issues and have not maintained contacts.

Shares of JPMorgan fell 5.5 percent to $ 159.16 in midday trading on Friday.

Although revenue declined in the last quarter, JPMorgan recorded a record year – $ 48.3 billion in 2021. JPMorgan’s pre-pandemic record was $ 36.4 billion.

JPM’s record revenue in 2021 is partly due to the fact that the bank has released $ 9 billion allocated in 2020 to prepare for potential credit defaults by businesses struggling during the pandemic.

“But as we’ve said before, we don’t consider releases based on this scenario to be primary or secondary revenue,” said former CEO Jamie Dimon.

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