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JPMorgan Chase & Co (JPM)
JPMorgan Chase Reports a Profit
JP Morgan has been considered one of the stronger banks during the downturn. The the nation's second largest bank reported its quarterly earnings in which first-quarter net income fell 10% from a year ago on surging credit costs while the investment-banking business reported record results. Losses included $711 million in writedowns on leveraged loans and $214 million on mortgage-related securities. Were gains in the investment banking division enough to offset losses? Was JP Morgan profitable in the first quarter and were these earnings in line expectations?
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JPMorgan Chase reported a $2.1 billion profit, or 40 cents a share, in the latest quarter that easily beat expectations. Analysts were anticipating JPMorgan Chase to record a profit of $1.38 billion, or 32 cents a share, according to Thomson Reuters. JP Morgan's investment banking division sprung back from a loss in the fourth quarter and posted a profit of $1.6 billion. This strong performance was driven by increased revenue in its fixed income division, which reported record results in some of its operations including trading and emerging markets. The bank's retail financial services division also helped contribute to the firm's quarterly profit, but some of those gains were offset in other areas. Down from a profit of $609 million a year ago, Chase's credit card division reported a net loss of $547 million.
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JPMorgan Chase, along with a handful of other banks such as Goldman Sachs (GS: Charts, News, Offers), has alluded to its interest in repaying TARP funds, given their strong capital position. "These levels of capital and reserves, combined with our significant pre-provision earnings power, enable us to withstand an even worse economic scenario than we face today," JP Morgan CEO Jamie Dimon said in a statement. Chase's Tier 1 capital ratio, a key measure of a bank's ability to absorb losses, stood at 11.3%. If you don't include the $25 billion that the Treasury Department injected into the firm under TARP, Chase's Tier 1 ratio was 9.2%. This is still well above 8% which is generally considered healthy. Dimon mentioned that, unlike Goldman Sachs, he did not think Chase would have to raise more capital in order to pay back the TARP money. Dimon also added that J.P. Morgan would likely not participate in the Treasury's Public-Private Investment Program, which allows banks to sell illiquid securities and troubled loans.
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JPMorgan's market value has almost doubled in the past month after Dimon said that the bank was profitable in January and February. We have seen other huge gains in the financial industry after Wells Fargo (WFC: Charts, News, Offers) announced it was profitable earlier this month. Following Chase's earnings report, investors' eyes will now focus on two of the nation's most beleaguered banks - Citigroup (C: Charts, News, Offers) and Bank of America (BAC: Charts, News, Offers). Citigroup and Bank of America are set to release their quarterly earnings numbers on Friday and Monday respectively.
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Click here to view a detailed profile of JPMorgan Chase & Co.
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