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JPM Earnings

04/12/2011

Wednesday morning, April 13, JP Morgan Chase & Co. (JPM) kicked off the earnings season for financials.  JPM continued its post-2008 credit crisis streak with another double digit percentage EPS beat of $1.28.  JPM has been properly cast as the banking industry's "Best in Class" and this morning's results suggest that they will continue to enjoy that status.

However, within the earnings report, there are multiple positive reads for Wall Street; unfortunately, not as many for Main Street.  In fact, the Wall Street recovery continues at a more appreciative pace than the Main Street recovery, which remains tepid.

1. Capital Markets

  • Quarterly FICC revenue increased 82% to $6.6 billion from $4 billion
  • For context, Q1 2010 FICC revenue was a record $6.9 billion
  • Quarterly Equity Trading revenue increased 25% to $1.4 billion from $1.1 billion
  • Advisory quarterly revenue increased 1%
  • Debt Underwriting quarterly revenue increased 6% 
  • Total quarterly Capital Markets revenue of $8.423 billion was 44% higher than Q4 2010

2. Loan Growth

  • Quarterly Total Loans fell 1% to $686 million from $693 million
  • Retail Financial Services Loans (consumer loans) fell 3%
  • Card Services fell 6%
  • Commercial Loans was the lone bright spot increasing 1%

3. Miscellaneous

  • Consumer Card sales volume increased 12% year on year
  • JPM posted a $1.2 loss against mortgage servicing assets
  • Credit quality improved with total charge offs down 27% quarter on quarter
  • JPM released $2.6 billion in reserves (42 billion in Card Services), a .44 per share benefit
  • Net Interest Income remains challenged with flat growth this quarter

Virtus Investment Partners provides this communication as a matter of general information. The opinions stated herein are those of the author and not necessarily the opinions of Virtus, its affiliates or its subadvisers. Portfolio managers at Virtus make investment decisions in accordance with specific client guidelines and restrictions. As a result, client accounts may differ in strategy and composition from the information presented herein. Any facts and statistics quoted are from sources believed to be reliable, but they may be incomplete or condensed and we do not guarantee their accuracy. This communication is not an offer or solicitation to purchase or sell any security, and it is not a research report. Individuals should consult with a qualified financial professional before making any investment decisions.