[DEBATE] : JPMorgan earns $2.1bn on record sales
Riaz K Tayob
riaz.tayob at gmail.com
Thu Apr 16 15:50:17 BST 2009
Well since mark to market was abandoned in the US, this is no surprise!
The new model for valuing toxic assets relies on modelling - which may
have differences but essentially is - the same approach that got the
subprimers and others into the mess in the first place... as Ralston
Saul says, the problem is the solution... and how manageable the
American populace are...
And Jim Cramer on CNBC has declared the recession over - so it must be
Berend Schuitema wrote:
> JPMorgan earns $2.1bn on record sales
> By Alan Rappeport in New York
> Published: April 16 2009 12:26 | Last updated: April 16 2009 13:53
> JP Morgan on Thursday reported first quarter profits of $2.1bn as its
> investment banking business returned to profitability, beating analysts'
> expectations, and said that it would not require additional capital to repay
> funds lent by the US government.
> Net income at $0.40 a share was 10 per cent lower than what it earned in the
> first quarter of last year but was ahead of consensus estimates of $0.32 a
> The news followed better-than-expected results from Goldman Sachs and an
> optimistic outlook from Wells Fargo in the past week and JPMorgan shares
> jumped 2.73 per cent to $33.45 in pre-market trading.
> Jamie Dimon, JPMorgan's chief executive, said that the bank benefited from
> growth in its retail banking business, higher volumes in its mortgage
> refinancing business and "excellent progress" integrating its recent
> acquisition of Washington Mutual.
> In a conference call with analysts Mr Dimon said that the bank would like to
> repay funds that it received through the government Troubled Assets Relief
> Program (Tarp) as soon as possible and that it would await federal guidance
> and the results of stress tests.
> "We want to do it in the interest of the United States, in addition to in
> the interests of JPMorgan," Mr Dimon said.
> Unlike Goldman Sachs which on Monday announced a stock offering to help
> repay its Tarp funds, Mr Dimon said that it would not need to make such a
> "Obviously we're in a pretty strong position with that and we don't think we
> need more capital," Mr Dimon said.
> The investment bank division reported net income of $1.6bn in the three
> months, compared with a loss of $87m in the same period last year. The
> unit's revenue reached $8.3bn, up from $3bn a year ago. The retail financial
> services unit earned $474m on revenue of $8.8bn, which was up from $4.8bn a
> year ago.
> Total revenue for the first three months reached a record $26.9bn from
> $17.9bn a year ago. However, the group's provision for credit losses was
> $10.1bn, up 97 per cent from the previous year. In particular, the provision
> for credit losses in the consumer segment was $8.5bn, compared with $4.4bn
> in the prior year. The increase reflected "higher net charge-offs, as well
> as increases in the allowance for credit losses primarily related to credit
> card loans and home lending," the bank said.
> "We are confident that even a highly adverse economic scenario would not
> compromise our overall strength and stability - or our ability to enhance
> our franchises," Mr Dimon said in a statement. "We remain well-positioned to
> benefit when the economy recovers and remain committed to serving our
> clients, investing in our franchise and building a stronger company for the
> JPMorgan's Tier 1 capital ratio was 11.3 per cent. Its tangible common
> equity ratio, a measure of health that the government might use in its
> stress tests of US banks, sits at 7.2 per cent. Both figures were improved
> from February when JP Morgan cut its dividend..
> In February JPMorgan surprised investors by slashing its quarterly dividend
> by 87 per cent to preserve capital, saying that "extraordinary times call
> for extraordinary measures".
> The move will save the bank $5bn a year. JPMorgan, which has accepted $25bn
> in capital from the US government, said at the time it had been "solidly
> profitable" in the first quarter to date and had $81bn of tangible common
> equity on its balance sheet.
> JPMorgan's results come as banks have reported or signalled better than
> expected results in the last week. On Monday Goldman Sachs, reported
> first-quarter net earnings of $1.81bn and revealed plans for a $5bn stock
> offering that will be used to help repay the $10bn in federal government aid
> that it received at the height off the credit crisis.
> Last week Wells Fargo lifted hopes for the stricken banking sector by
> announcing that it would report record first-quarter profits of $3bn later
> this month on $20bn of revenue.
> Copyright The Financial Times Limited 2009
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