Skip to Content
Stock Analyst Update

Raising Our Fair Value for Wide-Moat JPMorgan Chase

The firm reported stellar fourth-quarter results that were well-above consensus.


Wide-moat JPMorgan Chase (JPM) reported stellar fourth-quarter results that were well-above consensus, with net income coming in at $8.5 billion, or $2.57 per diluted share, largely driven by fixed-income markets related revenue. Return on tangible common equity was 17%, which was in line with the bank's through-the-cycle target. Revenue increased 9% while expenses came in at 4%, leading to excellent operating leverage for the quarter and positive operating leverage for the year. JPMorgan Chase stayed on course with its share repurchase program, average diluted shares fell 58.7 million (approximately 2%) compared with the previous quarter, and year-over-year EPS grew an impressive 30%. The bank reported $14.3 billion in managed net interest income, leading to a total of $57.8 billion for the year, above last quarter's management outlook of below $57.5 billion. Meanwhile, expenses came in at $65.5 billion, which was in line with guidance. On the back of these results, we plan to raise our fair value estimate by a low- to mid-single-digit amount as we incorporate the latest results into our projections.

The managed overhead ratio was roughly steady at 56% as the bank continues to reiterate its commitment to technological development and expansion, reflected by an increase in technology, communications and equipment expenses. Average core loans remained roughly flat; however, with the exclusion of some sales in home lending, loan growth came in at 3%. This was supported by a year-over-year increase in average deposits of 7% caused by client acquisition and strong organic growth. Credit costs remained roughly stable, even as we continue to see some normalization within certain loan portfolios. JPMorgan reported an advanced common equity Tier 1 ratio of 13.4%, up roughly 30 basis points from the previous quarter.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Eric Compton does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.