Stronger and stronger! JPMorgan Chase, while achieving its strongest annual profit in history, remains committed to investing in the technology sector.

Zhitong App learned that JPMorgan Chase, the Wall Street giant, not only announced better-than-expected performance last Friday, but also released its extremely optimistic preliminary expenditure guidance for 2024. During the bank's earnings conference call, Chief Financial Officer Jeremy Barnum provided some details about this year's spending plan. The largest commercial bank in the United States is very confident in the future profitability trends of its various businesses and is committed to high spending, especially in the technology field, which is expected to bring optimistic returns. JPMorgan Chase expects its adjusted expenditure in 2024 to reach around $90 billion, an increase of approximately $7 billion from last year. Barnum stated during the conference call, "The biggest driving force, thematically, is the significant growth in our various businesses."

The CFO of JPMorgan Chase stated that consumer and community banking is "the overall largest dollar driver" and expects spending to grow by 8% year-on-year as the bank continues to expand its geographic footprint. He said, "In 2023, we opened 166 new branches, and this year we plan to expand the same number of branches."

The marketing business sector is also an important component of JPMorgan Chase's expenditure growth. Barnum stated, "We see tremendous opportunities, tremendous market demand, and engagement in our credit card products, which are also reflected in our marketing business."

He pointed out that JPMorgan Chase is seeing high returns from early spending. "For example, in 2023, we added a net of 2 million checking accounts and saw an 8% increase in active card accounts. In the past three years, we have increased our share of the entire deposit market by 180 basis points."

In JPMorgan Chase's asset and wealth management business, the continued hiring of high-quality wealth advisors is one of the reasons for rising costs. He also stated that JPMorgan Chase needs to ensure that advisors and their new clients receive the necessary professional service support.

JPMorgan Chase's commercial banking franchise added some key teams in 2023. Barnum said, "The new clients and lending needs that JPMorgan Chase saw last year required support from the entire ecosystem, and this trend created a significant growth opportunity in the middle of the year, accelerating our long-standing innovation economy strategy."

In JPMorgan Chase's Corporate and Investment Bank (CIB) business, overall expenditure growth is relatively low due to the bank's strong market share and active investment in the payment business for some time. "With some investment efforts paying off, the biggest driving force in the CIB business is actually the persistent inflation rate."

More importantly, JPMorgan Chase has always focused on investing in the technology field, even during the pandemic and the recent economic downturn. CFO Barnum stated that almost all business departments of JPMorgan Chase are actively investing in cutting-edge technology, and the driving factors behind it are "very consistent throughout the entire commercial bank."

When asked about the expenditure on the globally popular new artificial intelligence technology, Barnum did not disclose any specific details, but he pointed out that this is one of the focus areas. He mentioned that Teresa Heitsenrehter, the Chief Data and Analytics Officer of JPMorgan Chase and a member of the Operating Committee, will be responsible for the bank's artificial intelligence investment strategy.

Although JPMorgan Chase is "very excited" about the opportunities in the field of artificial intelligence, it states that it will not chase after overly flashy goals. "Instead, JPMorgan Chase wants to take a very disciplined approach." Barnum said, "The current focus of all businesses is to ensure that we have a comprehensive and carefully selected list of high-impact use cases, and to invest significant resources in these use cases in a very practical and disciplined manner. We are accountable for actual results."

More information about expenditure plans will be announced by JPMorgan Chase's management at the Investor Day on May 20th. Looking back, two years ago, the bank's significant increase in expenditure guidance during an economic downturn attracted analysts' attention and caused stock price volatility.

The fourth quarter financial data shows that JPMorgan Chase's Q4 non-interest expenses were $24.5 billion, compared to $21.8 billion in the previous quarter and $19 billion in the same period last year. JPMorgan Chase's fourth quarter expenses exceeded analysts' expectations, as the bank warned that the duration of inflation may be longer than many investors expected.

The strong get stronger! JPMorgan Chase's profit scale in 2023 surpasses that of any bank in history, and NII is expected to continue growing in 2024.

JPMorgan Chase officially kicked off the US earnings season last Friday, announcing its financial performance for the fourth quarter of 2023. The report shows that JPMorgan Chase's Q4 revenue was $38.57 billion, a year-on-year increase of 11.8%; net profit was $9.307 billion, a decrease of 15% year-on-year; diluted earnings per share were $3.04, compared to $3.57 in the same period last year. Under the Non-GAAP basis, JPMorgan Chase's adjusted earnings per share for Q4 were $3.97, exceeding market expectations of $3.60.

JPMorgan Chase's annual profit exceeds that of any bank in the history of the US banking industry. The net profit for the fourth quarter of 2023 was $9.3 billion, and the annual profit was $49.6 billion, a 32% increase from 2022 and higher than the record-breaking $48.3 billion achieved in 2021. It was not until 2018 that the six largest commercial banks in the United States reached a total annual profit of $100 billion, while JPMorgan Chase almost reached half of that number in 2023. JPMorgan Chase ended the highest-profit year in the history of the US banking industry with a record-breaking net interest income for seven consecutive quarters. The bank predicts that its net interest income (excluding its market business) will remain at a similar level to 2023 in 2024, as it expects loan growth to partially offset lower interest rates.

According to the financial report, JPMorgan Chase's NII (net interest income) reached $24.2 billion in Q4 of last year. The bank stated that the full-year NII for 2024 could increase to around $90 billion, while analysts had previously expected a 2% decrease, with the 2023 NII being $89.3 billion.

Compared to JPMorgan Chase, the performance of other Wall Street banking giants appears lackluster. Bank of America (BAC.US), the second-largest bank in the US, reported Q4 financial data that fell short of analysts' expectations, mainly due to several expenses in the fourth quarter reducing profits, and an unexpected decline in revenue from fixed-income trading. Bank of America's Q4 net profit fell sharply by 56% to $3.14 billion, which is twice the 28% decline predicted by analysts.

Bank of America stated that part of the reason for the profit decline was a special assessment of $2.1 billion from the Federal Deposit Insurance Corporation (FDIC) and $1.6 billion in costs related to the collective exit of the financial industry from the London Interbank Offered Rate (LIBOR). In addition, the bank's net interest income declined along with revenue from fixed-income and foreign exchange trading, while overall expenses increased year-on-year.

Citigroup (C.US) reported a loss of approximately $1.8 billion in Q4, equivalent to a loss of $1.16 per share, far below analysts' expected earnings per share of $0.11. In comparison, the earnings per share in the previous quarter were as high as $1.63, and in the same period last year, it was $1.16. This includes some one-time items, with $780 million in expenses related to severance pay for employees affected by restructuring.

Citigroup also recorded operating expenses of as much as $1.7 billion for the quarter to pay for a special assessment, which is to replenish funds for the Federal Deposit Insurance Corporation (FDIC) after a series of bank failures in the US last year. Citigroup stated that the group will lay off up to 20,000 employees, saving the group up to $2.5 billion. This is part of CEO Jane Fraser's efforts to boost shareholder returns for this Wall Street giant. In addition, Citigroup's trading business revenue suffered a severe decline, with revenue of $3.4 billion in the last quarter, a YoY decrease of 19%. The revenue decline of 25% was attributed to factors such as the devaluation of the Argentine peso in bond and other fixed income securities trading. However, Citigroup's stock trading department saw a revenue growth of 9%.

Wells Fargo (WFC.US), on the other hand, reported that net charge-offs in the fourth quarter amounted to $1.26 billion, more than double the amount in the same period last year and exceeding analysts' expectations. Credit loss provisions increased by 34% to $1.3 billion. Wells Fargo CEO Charlie Scharf had previously warned in December that the company would incur losses related to its commercial real estate business in the last three months of the year. Meanwhile, Wells Fargo stated that net interest income for this year could decline by as much as 9%, compared to analysts' previous expectation of a 6% decline.