J.P. Morgan Chase
JPM +0.12%
& Co.'s first-quarter net income jumped 33%, beating analysts'
expectations, as strong investment-banking results offset declining
mortgage revenue at the nation's largest bank by assets. The bank also
benefited from continued improvements in loan quality that allowed it to
set aside less money for future losses.
The results from J.P. Morgan effectively kick off the first-quarter earnings season for the nation's big banks, and the results will likely set the tone for J.P. Morgan's rivals.
J.P. Morgan reported a profit of $6.53 billion, or $1.59 a share, compared with $4.92 billion, or $1.19 a share, a year earlier.
Shares edged lower, down by 11 cents to $49.20 shortly after the earnings were released. Through Thursday's close, the stock has risen 12% so far this year.
The latest period included a net
18-cent-per-share gain tied to reduced reserves for losses on
credit-card and mortgage loans. The year-earlier period included a net
per-share loss of eight cents tied to litigation expenses and changes in
the value of the bank's debt.
Revenue on a managed basis, which excludes the impact of credit-card securitizations and is on a tax-equivalent basis, was down 3.4% to $25.85 billion.
Analysts polled by Thomson Reuters expected a per-share profit of $1.39 on revenue of $25.86 billion.
The results were boosted by strong credit performance, and J.P. Morgan Chairman and Chief Executive Officer James Dimon noted the company is seeing signs of economic improvement that should bode well for the lender in the future.
"Housing prices continued to improve and new home purchases are also starting to come back," Mr. Dimon said in a statement.
Large banks this quarter are likely to benefit from an increase in mergers and acquisitions activity, Chris Kotowski, an analyst at Oppenheimer & Co., said before the results. That may help soften some headwinds in other areas, such as mortgage banking, he said.
J.P. Morgan's investment-banking arm turned a profit of $2.61 billion, up 28% from a year earlier and 30% from the fourth quarter.
J.P. Morgan is considered among the healthiest of the big U.S. banks, but like its peers has faced pressure to cut expenses as low interest rates, the slow economic recovery and increased regulatory scrutiny have crimped revenue.
In February, J.P. Morgan outlined plans to eliminate 17,000 jobs by the end of next year and reduce expenses by at least $1 billion annually. The cuts, amounting to 6.5% of the bank's workforce, will make J.P. Morgan by staffing the smallest among its peers. On Friday, the bank reported head count had dropped from the previous quarter to 255,898, down 5,271.
In the latest period, the bank said its noninterest expenses fell 16% from a year ago to $15.42 billion.
The net interest margin narrowed to 2.37% from 2.61%.
"They did a good job of controlling expenses," said Frederick Cannon, an analyst with KBW. He said credit looked solid, although mortgage banking was somewhat weaker than expected.
J.P. Morgan is still working to regain investor confidence after incurring $6.2 billion in losses last year from ill-placed, complex trades on credit-default swaps tied to corporate bonds. The position became so large the main trader was dubbed the "London Whale." The mishap also tainted the reputation of Mr. Dimon, long considered one of the industry's best risk managers. Mr. Dimon now faces a spring shareholder vote that would remove him as chairman.
Mr. Dimon on Friday noted that loan growth had been softer during the quarter as small businesses remain cautious.
J.P. Morgan said average loan balances in its commercial-banking unit were $129.3 billion, up 14% from the same quarter a year ago and 3% from the prior quarter.
The consumer and community banking arm recorded a profit of $2.59 billion, a 12% fall from the year earlier, but a 28% increase from the prior quarter.
Mortgage-loan originations were $52.7 billion, up 37% from the prior year. But mortgage banking profit was $673 million, down 31% from the prior year.
Commercial banking recorded a profit of $596 million, up 0.8% from a year earlier, but down 14% from the fourth quarter.
Before the bank's earnings release, analysts at KBW Research pointed to the bank's asset-management arm, noting that "while much attention is paid to trading, investment banking, and net interest income, the company's asset-management business quietly chugs along as the second-largest component of total revenues" for last year.
J.P. Morgan reported profit from its asset-management business rose 26% from a year ago and 0.8% sequentially to $487 million.
Meanwhile, the bank's credit-loss provisions—funds set aside to handle future loan losses—totaled $617 million, compared with $726 million a year earlier and $656 million in the fourth quarter.
Last month, J.P. Morgan received authorization from the Federal Reserve following the latest round of stress tests to repurchase an additional $6 billion of equity through March 31, 2014, and said it would raise its quarterly dividend by eight cents to 38 cents a share as of the second quarter, a raise it confirmed on Friday. But the bank also warned it may have to reduce those disbursements after it submits an additional capital plan by the end of the third quarter.
SOURCE : http://online.wsj.com/article/SB10001424127887323741004578418231254184900.html
The results from J.P. Morgan effectively kick off the first-quarter earnings season for the nation's big banks, and the results will likely set the tone for J.P. Morgan's rivals.
J.P. Morgan reported a profit of $6.53 billion, or $1.59 a share, compared with $4.92 billion, or $1.19 a share, a year earlier.
Shares edged lower, down by 11 cents to $49.20 shortly after the earnings were released. Through Thursday's close, the stock has risen 12% so far this year.
Agence France-Presse/Getty Images
J.P. Morgan Chase said loan growth had been softer during the quarter as small businesses remain cautious.
Revenue on a managed basis, which excludes the impact of credit-card securitizations and is on a tax-equivalent basis, was down 3.4% to $25.85 billion.
Analysts polled by Thomson Reuters expected a per-share profit of $1.39 on revenue of $25.86 billion.
The results were boosted by strong credit performance, and J.P. Morgan Chairman and Chief Executive Officer James Dimon noted the company is seeing signs of economic improvement that should bode well for the lender in the future.
"Housing prices continued to improve and new home purchases are also starting to come back," Mr. Dimon said in a statement.
Large banks this quarter are likely to benefit from an increase in mergers and acquisitions activity, Chris Kotowski, an analyst at Oppenheimer & Co., said before the results. That may help soften some headwinds in other areas, such as mortgage banking, he said.
J.P. Morgan's investment-banking arm turned a profit of $2.61 billion, up 28% from a year earlier and 30% from the fourth quarter.
J.P. Morgan is considered among the healthiest of the big U.S. banks, but like its peers has faced pressure to cut expenses as low interest rates, the slow economic recovery and increased regulatory scrutiny have crimped revenue.
In February, J.P. Morgan outlined plans to eliminate 17,000 jobs by the end of next year and reduce expenses by at least $1 billion annually. The cuts, amounting to 6.5% of the bank's workforce, will make J.P. Morgan by staffing the smallest among its peers. On Friday, the bank reported head count had dropped from the previous quarter to 255,898, down 5,271.
In the latest period, the bank said its noninterest expenses fell 16% from a year ago to $15.42 billion.
The net interest margin narrowed to 2.37% from 2.61%.
"They did a good job of controlling expenses," said Frederick Cannon, an analyst with KBW. He said credit looked solid, although mortgage banking was somewhat weaker than expected.
J.P. Morgan is still working to regain investor confidence after incurring $6.2 billion in losses last year from ill-placed, complex trades on credit-default swaps tied to corporate bonds. The position became so large the main trader was dubbed the "London Whale." The mishap also tainted the reputation of Mr. Dimon, long considered one of the industry's best risk managers. Mr. Dimon now faces a spring shareholder vote that would remove him as chairman.
Mr. Dimon on Friday noted that loan growth had been softer during the quarter as small businesses remain cautious.
J.P. Morgan said average loan balances in its commercial-banking unit were $129.3 billion, up 14% from the same quarter a year ago and 3% from the prior quarter.
The consumer and community banking arm recorded a profit of $2.59 billion, a 12% fall from the year earlier, but a 28% increase from the prior quarter.
Mortgage-loan originations were $52.7 billion, up 37% from the prior year. But mortgage banking profit was $673 million, down 31% from the prior year.
Commercial banking recorded a profit of $596 million, up 0.8% from a year earlier, but down 14% from the fourth quarter.
Before the bank's earnings release, analysts at KBW Research pointed to the bank's asset-management arm, noting that "while much attention is paid to trading, investment banking, and net interest income, the company's asset-management business quietly chugs along as the second-largest component of total revenues" for last year.
J.P. Morgan reported profit from its asset-management business rose 26% from a year ago and 0.8% sequentially to $487 million.
Meanwhile, the bank's credit-loss provisions—funds set aside to handle future loan losses—totaled $617 million, compared with $726 million a year earlier and $656 million in the fourth quarter.
Last month, J.P. Morgan received authorization from the Federal Reserve following the latest round of stress tests to repurchase an additional $6 billion of equity through March 31, 2014, and said it would raise its quarterly dividend by eight cents to 38 cents a share as of the second quarter, a raise it confirmed on Friday. But the bank also warned it may have to reduce those disbursements after it submits an additional capital plan by the end of the third quarter.
SOURCE : http://online.wsj.com/article/SB10001424127887323741004578418231254184900.html
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