Last night I gave a quick preview of JPMorgan's (NYSE: JPM) earnings release, so I thought I would follow up on the actual release this morning.
All in all, it was alright. Better credit was pretty much the entire story behind the earnings beat; both higher-than-expected reserve releases and lower charge-offs. This was not really all that surprising; by taking and keeping those higher reserves in earlier quarters, JPMorgan basically "stored up" some earnings power for later quarters. Had things gone a little differently, and we had seen another credit crunch or dive in the economy, those reserves would have helped JPM keep its head further above water than the competition.
I was a little disappointed with overall revenue performance, but then I expected a stronger quarter than the analysts.
Results for this company are always confusing, but here are some of the highlights:
- Revenue down 8%
- All business lines profitable
- $1.5B (0.36/sh) reduction in loan loss reserves
- $550M (0.14/sh) charge for UK bank bonus tax
- $0.9B (0.22/sh) in securities gains
- Losses in home lending are getting smaller
- Credit quality in Cards is getting better
- Loan loss provision ($3.4B) was down by more than half from Q1
- ROE of 12% (much better than I'd hoped)
- ROA of 0.94%
- Loans down 3%
- I-banking not great (down 3%)
- Fixed-inc trading down 35%, equity trading down 29%
So, now we have a hurdle for the rest of the field. Let's see what Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), Citigroup (NYSE: C), Bank of America (NYSE: BAC), and the rest can do...
Disclosure - I own share of JPMorgan
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