(15 January 2018 – Global) JPMorgan Chase beat fourth-quarter earnings expectations last week, and said new tax law changes will help future profits by not only reducing the amount it pays the federal government but also by stimulating more business.
The bank recorded US$2.4 billion (A$3 billion) in one-time charges in the fourth quarter related to the tax law changes. However, it expects its effective tax rate to drop to 19 percent this year from 32 percent last year, which will save it billions of dollars.
The tax changes brought in by the Trump Administration signed into law in December, designed to kick-start economic growth, slashed the U.S. corporate rate to 21 percent from 35 percent.
As a result, JPMorgan said it expects corporations to borrow more, offer more stock and pursue more mergers and acquisitions, all of which would boost revenue.
“Much of it will fall to our bottom line in 2018 and beyond,” Chief Financial Officer Marianne Lake said.