Falling markets weighed on JPMAM's AUM in Q4; profits rose

Stock and bond markets haven't yet gained back losses from 2022, and that weighed on JPMorgan Chase & Co.'s asset and wealth management division in the fourth quarter.

The largest U.S. bank's asset and wealth management unit reported having $2.8 trillion in assets under management in the fourth quarter, down 11% quarter-over-quarter and up 6% year-over-year.

Falling market valuations and net outflows from more liquid products were partially offset by inflows: there were $10 billion of net inflows to long-term products and $33 billion of net inflows to liquidity products, the bank said in earnings Friday.

Despite the lower AUM, the unit reported $4.6 billion in revenue, up 3% compared to a year earlier. Profits in the fourth quarter were $1.1 billion, up 1% year-over-year.

"Higher net interest income more than offset the impact of lower market levels," Jamie Dimon, chairman and CEO of the bank, said in a press release about the unit's results. The JPMAM unit's expenses rose to $3 billion, up 1% from a year ago. That was due to "higher investments in the business and structural expense, predominantly offset by lower volume- and revenue-related expense," the bank said in its earnings presentation.

The unit's private wealth management (J.P. Morgan Private bank and other financial advisors) and asset management (J.P. Morgan Asset Management) businesses are similar in size. They manage $2.4 trillion and $2.1 trillion in assets for clients, respectively.

The group manages $1.3 trillion for institutional investors, up 4% compared to the third quarter and down 11% compared to a year ago. Its global funds business managed $770 billion at the end of last year, up 8% compared to the third quarter and down 13% compared to the end of 2021.

Parent company JPMorgan Chase & Co. said its revenue rose 18% to $34.55 billion and profit was up 6% to $11 billion, or $3.57 per share, compared to last quarter.

Rising interest rates helped the bank's net-interest income grow 48% to $20.2 billion.

Although tougher times might be ahead, according to the bank. It has also built a net reserve of $1.4 billion "driven by updates to the firm's macroeconomic outlook, which now reflects a mild recession in the central case, as well as loan growth in card services, partially offset by a reduction in pandemic-related uncertainty," Jeremy Barnum, chief financial office at JPMorgan Chase & Co. said during the bank's earnings presentation.