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IBDvalueinvestin (99.66)

Struck out again?? I closed JPM,WFC yesterday and opened up numerous short ETF's

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April 16, 2009 – Comments (2)

Then this morning JPM comes out with $2.1B profit. Just my luck, I guess the luck of the Irish never changes.

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

JPMorgan Chase 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 share.

The news followed better-than-expected results from Wells Fargo and Goldman Sachs 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.

EDITOR’S CHOICEJPMorgan statement - Apr-16FT Alphaville: Record IB revenues for JP Morgan - Apr-16John Gapper: Don’t set Goldman free - Apr-15In depth: US banks - Apr-03

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 move.

“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 future.”

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 JPMorgan 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.

2 Comments – Post Your Own

#1) On April 16, 2009 at 9:38 AM, bigpeach (28.13) wrote:

IBD, I think you should stop trying to catch every up and down move in financials. You might as well go to the casino if you're going to trust your money to luck.

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#2) On April 16, 2009 at 9:40 AM, dudemonkey (39.88) wrote:

You ever think of buying-and-holding?  You'll live longer, and you'll probably have more money.

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