New York (AFP) - JPMorgan Chase reported a dip in fourth-quarter profits Friday as higher costs for employee compensation offset a benefit from an improving economy that has reduced reserves in case of defaults.

Earnings came in at $10.4 billion, down 14 percent from the year-ago period.The results included $1.8 billion in net reserve releases from funds that were set aside earlier in the pandemic in case of bad loans.

Strong points in the report included higher investment banking fees tied to what JPMorgan Chief Executive Jamie Dimon called "unprecedented" merger and acquisition activity.

The banking giant also saw a pickup in overall lending activity.

But results were pinched by higher costs, which jumped 11 percent in the quarter.In consumer and community banking -- the biggest division -- expenses were "driven by increased compensation, technology and marketing expense as we continue to invest in and grow the business," the bank said.

Dimon cited "exceptionally low" charge offs as a sign of a broadly solid economy.

"The economy continues to do quite well despite headwinds related to the Omicron variant, inflation and supply chain bottlenecks," Dimon said, adding "we remain optimistic on US economic growth as business sentiment is upbeat and consumers are benefiting from job and wage growth."

Shares fell 3.0 percent to $163.26 in pre-market trading.