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JPMorgan Chase achieves record profits due to the release of the reserve stock

JPMorgan posted strong results in the fourth quarter of 2020, capping a challenging year after generating record revenues, benefiting from its diversified business model and describing the dedication of its employees, with profits of $12.1 billion, 42% higher than the same quarter last year.

The company said that it does not consider its withdrawal of $2.9 billion of reserve stock to result in basic or recurring earnings, and the basic reserve calculations that the company makes very carefully include multiple hypothetical, probability-adjusted, multi-year scenarios, which can be expected to present quarterly volatility in the company’s reserve stock.

The company said that the effective vaccine and the development in incentives contributed to the release of the reserve stock, but the credit reserve stock remained more than $30 billion, which indicates an unknown economic situation in the near term.

But the amount in the company’s reserves will allow it to withstand an economic environment that is much worse than current expectations by many economic analysts, and includes the release of the $900 million reserve stock from the company’s home lending division.

The company reported net revenue for the Consumer & Community Banking division, which includes home loans, of $4.3 billion, 3% higher than the fourth quarter of 2019, and the home loan segment reported net revenue of $1.5 billion, which is 16% higher than the fourth quarter of 2019. However, and revenue from the Automotive and Mortgage division increased by 20%, with consumer spending continuing to improve, which was reflected in higher spending on credit cards and debt together during the entire quarter.

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