Daily Stock Market Updates

Filed under: Company News, JP Morgan Chase, Earnings, Banks

By David Henry
and Tanya Agrawal

JPMorgan Chase reported a far weaker-than-expected quarterly profit as revenue from securities trading fell in a climate of uncertainty about the strength of the economic recovery and the Federal Reserve’s intentions on interest rates.

Net income fell to $5.27 billion, or $1.28 a share, from $6.53 billion, or $1.59 a share, in the same quarter of 2013, the biggest U.S. bank said Friday.

Analysts on average had expected earnings of $1.40 a share, according to Thomson Reuters I/B/E/S. The net earnings for both the latest and prior quarter included special items.

JPMorgan (JPM) shares, which recently topped $61 to trade at their highest level in 13 years, were down 2.4 percent at $55.99 in premarket trading.

Chief Executive Officer Jamie Dimon has been pushing to improve the bank’s profitability after net income dropped 16 percent last year due to massive legal settlements and rising costs to improve compliance with laws and regulations.

“We have growing confidence in the economy — consumers, corporations and middle market companies are in increasingly good financial shape and housing has turned the corner in most markets,” Dimon said in a statement.

The bank’s revenue from fixed-income fell 21 percent to $3.8 billion in the quarter ended March 31, while revenue from equity markets fell 3 percent to $1.3 billion.

Some investors worry about how much of the big banks’ revenue streams from fixed-income trading have been lost forever as a result of changes ordered by regulators to make the banking system safer. JPMorgan’s annual costs to comply with laws and regulations and control risk have increased by about $2 billion.

JPMorgan, the first big investment bank to report for the quarter, said noninterest expenses fell 5 percent in the latest quarter to $14.6 billion.

Dimon is aiming to hold down overhead, which he defines as non-interest expenses aside from litigation, to below an average of $14.75 billion per quarter, or $59 billion for the year.

Mortgage banking net income fell to $114 million in the quarter, a drop of $559 million from the year-earlier quarter.

The bank’s mortgage originations fell 68 percent to $17 billion from a year earlier, and were down 27 percent from the fourth quarter.

U.S. mortgage lending has been cooling as homeowners finish refinancing their loans.

JPMorgan, the largest U.S. bank by assets, said total assets at the end of March stood at $2.48 trillion, up from $2.42 trillion at the end of December.

The firm’s supplementary leverage ratio, a measure of a bank’s capital compared with its assets, was 5.1 percent.

Leverage ratios took on added importance Tuesday when the Federal Reserve approved new rules setting minimum levels that could force the eight biggest U.S. banks to boost their capital by a total of $68 billion.

The rule sets a higher minimum of 6 percent for the company’s insured bank subsidiary.

Before the rule was approved in its latest form, JPMorgan had said it was on track to raise its ratio from 4.6 percent at the end of December to the 5 percent minimum for its holding company by the end of this year.

Permalink | Email this | Linking Blogs | Comments

http://www.dailyfinance.com/2014/04/11/jpmorgan-earnings/