JPMorgan Chase & Co reported higher-than-expected quarterly earnings, helped by narrowing losses on bad loans that allowed it to release $2 billion in reserves.
JPMorgan, the first of the major U.S. banks to report earnings for the fourth quarter, said profit increased to $4.8 billion, or $1.12 a share, from $3.3 billion, or 74 cents a share, a year earlier. Analysts on average expected $1 a share, according to Thomson Reuters I/B/E/S.
"Although we continue to face challenges, there are signs of stability and growth returning to both the global capital markets and the U.S. economy," said Chief Executive Jamie Dimon.
Fewer bad loans meant the bank could reduce loan loss reserves for its credit card unit by $2 billion, or 30 cents a share after tax.
Wall Street broadly interpreted the results as indicating underlying strength, but some critics questioned whether the release of reserves distracted investors from the still-difficult economic circumstances weighing on the bank's main consumer business.
"The loan-loss reserves are something that bugs me," said Matt McCormick, portfolio manager and banking analyst at Bahl & Gaynor. "I would love to see a bank hit their numbers without taking from loan-loss reserves for once," he added.
The bank benefited from a turnaround in its retail banking unit, which reported a profit of $708 million compared with a loss of $399 million in the year-earlier quarter.
Revenue increased 6 percent to $26.7 billion.
