JPMorgan’s profits decline as the lack of talent on Wall Street increases costs


JPMorgan Chase’s quarterly profit fell 14% despite the profitability of investment-banking fees, as business revenues fell and payroll costs increased amid a lack of talent on Wall Street.

Chief Financial Officer Jeremy Barnum said the bank was facing “headwinds” as equity and bond-market volatility stabilized by 2020, thereby hurting trading returns. But because the bankers demanded more job hop and fat bonuses, they split the cost of retaining employees.

“It’s true that labor markets are tight. There’s a bit of labor inflation, and it’s important for us to attract and retain the best talent,” Barnum said in a conference call with reporters.

There have been comments that major banks have raised their record-setting salaries this year as the counterculture war reaches a fever pitch. The boom in businesses has boosted investment banking returns but has led to major burnout among analysts and associates.

JPMorgan says its operating expenses rose 11% last year to $ 17.9 billion because the bank offered higher salaries.

On Friday morning, the nation’s largest bank reported fourth-quarter profit of $ 10.4 billion, or $ 3.33 per share – beating analysts’ expectations of $ 3.01 per share, according to FactSet.

In the fourth quarter, JPMorgan’s investment bank was once again the star of the show. Dealmaking, IPOs and M&A are hot and consulting fees are up 37%.

Asset and wealth management profits rose 18%, partially offset by an increase in assets under management. Trade revenues – skyrocketing amid pandemic-related uncertainty – fell 13%.

“The economy is doing well despite headwinds related to Omicron transformation, inflation and supply chain disruption,” Dimon wrote in a press release. “Credit continues to be healthy with exceptionally low net charge-offs and we are optimistic for US economic growth.”

“The economy is doing well despite the headwinds associated with Omicron transformation, inflation and supply chain disruption,” said Jamie Dimon.
SOPA Images / LightRocket by Get

JPMorgan also hit a $ 200 million fine in the fourth quarter after admitting it failed to archive employee messages on work-related issues. For years, JPMorgan employees – from analysts to top directors – used personal tools to discuss company issues and failed to keep up with communications.

JPMorgan stock recently traded down 5.5% at $ 159.16 during midday trading on Friday.

Even though profits fell in the final quarter, JPMorgan still reported a record year – making $ 48.3 billion in 2021. JPMorgan’s pre-epidemic record was $ 36.4 billion.

JPM’s record profit in 2021 is $ 9 billion, set by the bank in 2020 to prepare potential loan defaults for businesses struggling during the epidemic.

“As we mentioned earlier, however, we do not consider these scenario-driven releases to be core or recurring benefits,” said Jamie Dimon, chief executive officer of Hard-Charging.

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