In the meantime, it is true, J.P. Morgan has done nothing to tarnish its crown, stringing together a run of exceptional results, notably thanks to the performance of its investment banking and markets franchise.
This segment accounts for a larger share of consolidated profit before tax and provisions than retail banking this year - in particular thanks to trading activities - which represent half of the segment's revenues and remain supported by capital markets that are still running hot.
The past year therefore stands out as another vintage, with a 17% return on equity, a 6% rise in deposits, and 11% growth in loans - largely driven by wholesale financing to financial institutions. In marticular, net interest income is rising despite rate cuts in the US.
Net income attributable to shareholders fell by $1.2bn from last year, although share buybacks remain massive - notwithstanding the risk highlighted later in this article - which enable EPS to reach $20.02, versus $19.75 at the same time last year.
It is hard not to detect in two of the elements mentioned here - the outsized share of trading and wholesale lending - potentially alarming late-cycle signals, all the more so as valuation now brushes up against its historical highs, reaching 3x tangible book value.
The last time such heights were reached was in 2008, just before the subprime crisis broke out. In this context, it is hard not to be surprised that the bank led by Jamie Dimon devoted nearly $30bn - net of share issuance linked to stock options - to share buybacks that year.
In May 2024, Dimon had nevertheless bluntly warned that buying back its own shares at over twice tangible book value was a mistake. MarketScreener had already voiced strong reservations on the subject exactly twelve months ago. However, nothing has dampened investors' enthusiasm for the world's largest bank.
If J.P. Morgan's results were poorly received yesterday, it's mainly because the bank warnis that its operating expenses should rise by $10bn next year.
