The Banking and Strategy Initiative

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Bank Results Season: JP Morgan reverts to a passing game with $4 bln income

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Earnings Season off to a good start

The good news first, the Bank resumed its leadership in the Deals game with #1 in Fee income year to date, and charge offs continued an expected decline in the Credit cards business, cementing profits in the slow and steady retail banking and corporate banking businesses

The bank also used gains in CDS betting to bolster the required litigation reserves and cover PE losses of $600 million. $1.9 bln DVA gains made from improvement in credit spreads, thus rode over the additional  $1 bln to Litigation reserves. the bank’s profits of $4 bln thus are a good score as per market expectations and more, an almost double-digit surprise, on a revenue per expectations of $24.4 bln

The bank also claimed to improve US headcount by more than 10,000 employees in the quarter and both Commercial Banking and Treasury and Securities Services gained momentum with growth of 31% and 41% respectively. Treasury also grew a new page in Trade Finance loans with a growth of 69%

The mortgage picture remains subdued with charge off rates of concern and the bank restricting reporting to its usual million odd modifications in the state program(s) like HAMP Credit Card charge offs reduced to 4.54%, from its heady 11% in 2009

Investment banking revenues were a good $6.6 bln and the investment bank scored 40% of the net income with $1.65 bln. Fixed Income and Equity grew including the Debit Valuation adjustment by 15% and 25% respectively to $3.3 bln and $1.4 bln

Retail Financial Services trebled from June 2011 and grew 65% over September 2010 to record

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another $1 bln with net charge offs dropping $47 mln to below 3% for the retail portfolio Credit cards and investment sales decreased 20% from June reflecting the loss in investor enthusiasm in the quarter and a dullness in card spending that is likely to stay on bolted to a slowly recovering economy

Commercial banking remained on course from june at $500 mln in income. Loan loss reserves added $812 mln to profits mostly from the consumer accounts as NPAs were down a third from last year to $12.2 bln. NPAs were higher at $13.3 bln for the June quarter



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