Tag: U.S.

JPMorgan’s profits jump as economy, investment bank recovers, BFSI News, ET BFSI

Banking & Finance

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JPMorgan Chase & Co, the nation’s largest bank by assets, said its fourth quarter profits jumped by 42 per cent from a year earlier, as the firm’s investment banking division had a stellar quarter and its balance sheet improved despite the pandemic.

The New York-based bank said it earned a profit of USD 12.14 billion, or USD 3.79 per share, up from a profit of USD 8.52 billion, or USD 2.57 per share, in the same period a year ago. Excluding one-time items, the bank earned USD 3.07 a share, which is well above the USD 2.62 per share forecast analysts had for the bank.

The one-time item was JPMorgan “releasing” some of the funds it had set aside last year to cover potential loan losses caused by the coronavirus pandemic and subsequent recession. Banks had set aside tens of billions of dollars to cover potentially bad loans, and JPMorgan had been particularly aggressive in setting aside funds early in the pandemic.

Releasing those funds goes straight to a bank’s bottom line when it reports its results, but it’s not money that the bank generated from loans, customers or borrowers. It’s just funds that were effectively put into escrow and are no longer in escrow.

The USD 1.9 billion release is only a fraction of what JPMorgan set aside last year, and with the pandemic raging across the globe and particularly here in the U.S., it’s uncertain how much more the bank will release in the upcoming quarter.

“While positive vaccine and stimulus developments contributed to these reserve releases this quarter, our credit reserves of over USD 30 billion continue to reflect significant near-term economic uncertainty,” said JPMorgan CEO Jamie Dimon in a statement.

The driver of JPMorgan’s profits this quarter was the investment banking business. The corporate and investment bank posted a profit of USD 5.35 billion compared with USD 2.94 billion in the same period a year earlier. JPMorgan said it saw higher investment banking fees – money banks collect to advise companies on going public or buying other companies – as well as higher fees from its trading desks.



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Bitcoin snaps slide while leaving everyone in dark on true worth, BFSI News, ET BFSI

Personal Finance

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By Eric Lam

Bitcoin steadied Tuesday after flirting with a bear market in a plunge that left investors grasping for clues about what lies ahead for the world’s largest cryptocurrency.

The digital coin rose as much as 8% to about $36,600, but the move higher pales compared to the gyrations that took Bitcoin to an all-time high of nearly $42,000 on Jan. 8 before a precipitous slump over Sunday and Monday.

The latest bout of roller-coaster volatility recalls past boom and bust cycles including the 2017 bubble, and has investors debating whether this is a healthy correction or the end of the latest bull run for cryptocurrencies.

“We think a pull back is healthy,” said David Grider, lead digital strategist with Fundstrat Global Advisors LLC, who added he doesn’t think the recent price action indicates that Bitcoin has already topped out.

Investors who bought the digital coin a year ago are still sitting on gains exceeding 300%. Pinpointing who is mainly responsible for the rally is one of the many crypto mysteries — Bitcoin funds, momentum chasers, billionaires, day traders, companies and even institutional investors have all been cited.
Just as hard is working out what caused the recent two-day drop of as much as 26%. For some, a bounce in the dollar may be among the reasons. The greenback has snapped a prolonged losing streak after rising U.S. government bond yields bolstered its allure.

“The dollar is showing strength,” said Vijay Ayyar, head of business development with crypto exchange Luno in Singapore.

Ayyar is monitoring what happens if the U.S. Dollar Index climbs to 92 from the current level of about 90. “If the dollar powers through that level then we may have seen a Bitcoin top at $40,000,” he said.

At the same time, the world remains awash with monetary and fiscal stimulus, and some of that wall of money could yet gravitate to crypto assets.

Bitcoin believers continue to tout the digital currency as a viable hedge for inflation risk and the potential debasement of fiat currencies. Some forecasts for its long-term price range from $146,000 to $400,000.

“As long as the world is flooded with money and safe assets offer poor compensation, Bitcoin will be relevant,” Howard Wang, co-founder of Convoy Investments LLC, wrote in a Jan. 10 note. “Volatility and asset bubbles will be a fact of life.”



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