J.P. Morgan wealth earnings rise in Q4 on equity values

J.P. Morgan adds 584 reps as Dimon predicts economic growth in 2022

January 18, 2022 3:11 PM

J.P. Morgan Chase added several hundred more financial advisors as its wealth management arms raked in flows of tens of billions of dollars in the fourth quarter.

The firm’s traditional brokerage, Global Private Bank, Chase branches and robo advisor picked up nearly 600 new registered representatives compared to the same time a year earlier, J.P. Morgan said as part of releasing its quarterly results on Jan. 14. It marks at least the second quarter in a row in which the megabank picked up at least 500 advisors on a net basis.

Although the Consumer & Community Banking segment that houses J.P. Morgan Wealth Management brought in slightly lower profit and revenue, CEO Jamie Dimon expressed a bright outlook for the U.S. economy even with significant challenges to client portfolios.

“The economy continues to do quite well despite headwinds related to the Omicron variant, inflation and supply chain bottlenecks,” Dimon said in a statement. “We remain optimistic on U.S. economic growth as business sentiment is upbeat and consumers are benefiting from job and wage growth.”

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Note: The firm doesn’t break out specific wealth management metrics across its organization, which includes the Global Private Bank in its Asset & Wealth Management division and the 4,700 client advisors in the Consumer & Community Banking segment.

Wealth Management advisors and client assets

The number of client advisors with J.P. Morgan Advisors, online investing and Chase branch-based practices rose by a net 308, or 7%, year-over-year to reach 4,725 by the end of 2021. Client investment assets soared by 22% to reach $718 billion, due to equity value appreciation and organic inflows, according to the firm.

Private bank advisors and client assets

The headcount of client advisors with the Global Private Bank surged 11%, or 276, from the year-ago period to reach 2,738. The unit’s assets under management jumped 17% to $805 billion, while client assets climbed by 22% to $1.93 trillion. Overall across the private bank and asset manager, J.P. Morgan added global inflows of $34 billion in the fourth quarter and loan growth of 18% year-over-year, primarily from securities-based lending, Dimon noted.

Wealth Management revenue and earnings

The Consumer & Community Banking division earned net income of $4.23 billion on revenue of $12.28 billion. Revenue slipped by 4% from the year-ago period and profit ticked down 2% as the division sustained a 10% spike in noninterest expense from higher costs relating to compensation, technology and marketing. The specific revenue from consumer and business banking increased 7% to $6.2 billion from the growth in client investment assets, as well as the impact of executing more debit transactions and Paycheck Protection Program loans.

Private bank revenue and earnings

In the Asset & Wealth Management unit, net income grew by 46% year-over-year to $1.15 billion and revenue expanded by 16% to $4.47 billion as a result of the company’s higher volume of deposits, loans and management fees. For the Global Private Bank, net revenue enlarged by 20% to $1.99 billion.

Remark

There’s “a pretty good chance” that the U.S. economy could eclipse current growth estimates of 3.5% to 4% for 2022 and reach 6% or 7% by the end of this year, Dimon said in response to an analyst’s question about his expectations for 2022 given that the Fed is expected to raise interest rates this year, according to a transcript by SeekingAlpha. Dimon cited healthy balance sheets, spending and confidence among U.S. consumers and businesses. “The table is set pretty well for the growth, with obviously the negative being inflation and how that gets navigated,” Dimon said. “I grew up in a world where [former Fed Chairman] Paul Volcker raised interest 200 basis points on a Saturday night. And this whole notion that somehow it’s going to be sweet and gentle and no one is ever going to be surprised, I think it’s a mistake. That does not mean we won’t have growth.”