Associated Press | JPMorgan Chase & Co.’s first-quarter profit easily beat expectations
Wednesday as trading gains helped offset consumer loan losses. The
bank’s CEO said the U.S. economy was showing clear signs of improvement.
JPMorgan Chase, the first of the big banks to report earnings for the
January-March period, said it earned $3.3 billion, up from $2.1 billion a
year earlier. The company again added to its reserves for failed loans
during the quarter, but its investment banking division and other
businesses enabled it to more than overcome the ongoing weakness in
lending.
CEO Jamie Dimon offered a more upbeat assessment on the future than he has in the past, saying the economy still faces challenges but is showing “clear and broad-based improvements.”
“We believe these improvements will continue and are hopeful they will gather momentum, resulting in a strong recovery,” Dimon said.
JPMorgan Chase has been one of the strongest banks as it weathered the financial crisis and recession, so its performance shouldn’t be taken as a sign of how well other banks did during the quarter. Many financial companies don’t have such big investment banking operations, which includes trading of stocks and bonds and allowed JPMorgan, the nation’s largest bank by assets, to overcome its loan losses.
Still, the improvement in its loan business was a good sign for other banks and the economy. JPMorgan Chase said its nonperforming loans, those that are in default or close to being in default, totaled $2.7 billion, up $946 million from a year earlier but a $763 million improvement from the final three months of 2009.
“We continued to see delinquencies stabilize, and in some cases improve, in our credit portfolios,” Dimon said. “Ultimately, the health of these portfolios will track the health of the economy.”
JPMorgan earned 74 cents per share, easily topping analysts’ expectations of 64 cents. Total revenue rose 5 percent to $28.2 billion for the quarter, surpassing forecasts.
Investors were pleased with the report. They bid JPMorgan Chase stock up 3 percent in pre-opening trading and also sent other financial stocks higher.
Investment banking, especially bond trading, generated the bulk of JPMorgan’s profits. The bank said that division earned $2.5 billion, up 50 percent from a year earlier.
While credit losses continued to weigh on the bank’s performance, they were less of a drag than in the past. JPMorgan set aside $7 billion for loan losses in the quarter, down 30 percent from a year ago.
JPMorgan said it lost $1.3 billion on its real estate portfolios, slightly more than the $1.1 billion it lost the previous year. Signaling that it expects further credit weakness, the bank set aside $3.3 billion for real estate loan losses, up from $3.1 billion a year earlier.
The bank’s losses in its credit card business fell to $303 million, while provision for future credit card losses also dropped to $3.5 billion.
JPMorgan has performed better than other large competitors in part because of its relatively light exposure to troubled subprime mortgages and commercial real estate. It was also among the first banks to repay government bailout money. JPMorgan last year paid back all of the $25 billion it had received at the height of the credit crisis in 2008.
Its relatively stronger foundation than its competitors, which report results in the coming days, helped set JPMorgan up for a quarter that is likely to be among the best in the industry, according to analyst estimates. Bank of America Corp. is scheduled to report earnings on Friday, followed by Citigroup Inc., Goldman Sachs Group Inc. and Morgan Stanley the following week.
JPMorgan Chase’s profits are up while their customers with less than $50,000 in their banks make zilch. At the same time as Jamie Dimon got a huge raise, interest bearing checking accounts were eliminated. Sure miss that $3.35 I made last year. At least it was something.
Still waiting for that trickle down to effect me and those I know. Good going bankers. You protected yourselves, you’re making more than ever, and your customers be damned. Still no financial and banking regulations in place since, of course, things are fine. America is just great. Where the few really rich can become even richer while the masses of peasants continue to suffer and plod along.
Good for Chase making big profits! Good to be a big bank! No matter that most of the profits are at the expense of the thousand desperate people who are out of work and/ or losing their homes.
One is left to wonder about the existence of any intentions on the part of our “Savior” president, his advisers and Mr. Bernanke to do something about at least some accountability measures and minimum legislation.
So, banks get to borrow from the “Fed Window” at next to nothing rates, turns around and bets that money on Wall Street, and make a killing. And for all that, they award themselves “bonuses” for a job well done.
If a fireman went around setting houses on fire, and then put them out, would we reward him for being such a talented fireman? Or would we kick them out for putting people’s lives at risk? In this case, the banks have put the whole country at risk.
Maybe now that profits are up they can raise their dividend up from the measly 20 cents per year. No wonder they’re making money hand over fist.
There needs to be some sensible (!) regulation. The banks can borrow at 0.25%, but lend you at double digit rate, charge you absurdly rates on credit cards, and if you happen to be low on your account, they will charge you all types of hefty fees.
On the other hand, our so intelligent government goes out at the lightening speed to bail them out instead of people. Now they get money and make fortune of the bail out and return handsome dividends for their employees and share holders.
The net result is that the financial sector is really booming and people are where they were (low in the gutter).
Not only that, all types of government and agencies are talking of raising taxes, fees, etc to collect from the 50% population, who pay taxes.
Our government is so out of focus that they want to squeeze people to the limit, but they do not want to reduce their expenses, benefits or careless expenditures.
I hear only a few leaders who have taken pay cut or reduced benefits, but all others are in the privileged class and do not want to compare their perks and pay with rest of the people. They want to keep on getting the same pay and benefits for themselves, and if possible their whole family and generations as well.