The Banking and Strategy Initiative

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Bank Earnings Season : JP Morgan beats the housing blues ( Q4 and Full year 2012 )

English: Category:JPMorgan Chase

English: Category:JPMorgan Chase (Photo credit: Wikipedia)

JP Morgan finally came to terms with the housing blues and its prime housing portfolio notwithstanding large robo signing indictments helped the bank post a firm Net income of $5.7 bln and against slower expectations lately of a $1.16 -$1.22 earnings per share, the bank posted a $1.39 in EPS as it did in Q2 after minusing the Whaled out CIO losses. JP Morgan posted $24.4 bln in revenues and the $100 Bln mark eluded it by a $100 mln as Full year 2012 sales hit $99.9 bln and Earnings for 2012 scored a clean $21.3 bln on smaller equity as buybacks wwere back in tandem with quality tier I capital raising no longer trumped by easy chumps wholesale funding from any and every bank next door. While Deutsche Bank will be licking its talons trying to avoid the Fed disallowing it in the US because of lower Capital, J P Morgan posted a Basel II Tier I common of an estimated $144 bln as Basel II rules are not crystal yet and is likely to be actually higher. That translates to a 8.7% score and the bank is required to hold 9% from 2015 and its local G-SIFI target of 2.5% for 2019 denominated by the Fed. G-SIFY target s would additionally require banks to allocate this surplus capital to international business each geography , national capital requiring a separate subsidiary well capitalised for local business

MBS business is relatively recent at the bank (Matt Connor DB) but one feels they are doing well in that part given the gap with other first originators of mortgages. NiMs continue to trend lower as sources of funding change and have come to a low 2.8% in the fourth quarter, likely closer to a bottom by our curveball mechanics

Fourth quarter net ROE has dipped to 11% from the washed out  Q3 when it reported a zero profit balance sheet and mortgages continue to be negative for the bank’s bottom line with a $0.16 cents per share loss after all the charges for settlements have been taken into account. The EPS and bottom line is a 2.8 fold increase over the same period last year when it skinned the cat for a $1.8 bln in profits and closed a near respectable year.

Net Income for the year at $19,877 bln is a similar $2 bln increase over 2011’s $17,568 bln

In Consumer Banking the bank has increased Fee income take by a clean 20% on year in Q4 increasing 100 branches and keeping Net Interest income from loans safe, people paying for big brand banking in Fees and Charges allowed to the bank

The bank also kept its no. 1 position in Credit Cards inthe US esp in Visa and Co branded cards after the HSBC portfolio was shipped off even as BofA is still looking for direct competition with this numero uno in the category. Net charge offs for Card loans is down to the ‘normal’ 1.40%  from higher than 5% levels two years ago.

The bank management meets the analysts in an hour from now. 


Auto Loans for the bank were $5.5 B neck to neck with Wells Fargo in the quarter and the auto loan book is $49.3 bln

The Corporate Investment Banking slide was in control with a Topline of $7.6 B and Goldman Sachs supposed to have improved in brokerage business too and Trading might see climb back in staff counts next year with the $8.3 Bln in Q3 not a fluke though the current quarter saw a drop with regulatory uncertainty and a very late acquiescence by Basel on Liquidity regulations. JPM;s Global liquidity reserves count long term sources and total $453 bln


Commercial Banking Loan income has not grown despite claims of cross selling also in motion at competitor BofA and Asset Management , doing not well at BofA while Morgan Stanley is exiting trading businesses in what it calls are the wealth management businesses




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This entry was posted on January 16, 2013 by in Financial Markets and tagged , , , , , , , .


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