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Last Update: 12-Apr-13 07:42 ET
JP Morgan shares fall 1% despite beat on EPS
JP Morgan (JPM $48.90 -0.41) reported first quarter GAAP earnings of $1.59 per share, $0.19 better than the Capital IQ Consensus Estimate of $1.40. Net income was $6.5 bln, up $1.6 bln, or 33%, from the prior year. The increase in earnings was driven by lower noninterest expense and lower provision for credit losses, partially offset by lower revenue. Q1 results included the following significant items $650 mln pretax benefit ($0.10 per share after-tax increase in earnings) from reduced mortgage loan loss reserves in Real Estate Portfolios $500 mln pretax benefit ($0.08 per share after-tax increase in earnings) from reduced credit card loan loss reserves in Card Services. GAAP revenue fell 3.6% year/year (+6% QoQ) to $25.12 bln while managed net revenue was $25.8 bln, down 3% YoY (+6% QoQ); consensus called for $25.98 bln in rev. Noninterest revenue was $14.8 bln, down $167 mln, compared with the prior year. The current-quarter revenue included a $126 mln gain from DVA on certain structured notes and derivative liabilities resulting from the widening of the Firm's credit spreads. Q1 net interest margin (NIM) -2 bps QoQ -27 bps YoY at 2.83%, roughly in-linewith expectations.
Net interest income was $11.1 bln, down $742 mln, or 6%, compared with the prior year, reflecting the impact of low interest rates, as well as lower loan yields due to competitive pressures and portfolio run-off, lower investment securities yield, and limited reinvestment opportunities, partially offset by lower long-term debt costs, primarily due to a change in mix and lower deposit costs. Fortress balance sheet strengthened: Basel I Tier 1 common1 of $143 bln, or 10.2%; Estimated Basel III Tier 1 common1 of 8.9%, up from 8.7% in the prior quarter The provision for credit losses was $617 mln, down $109 mln, or 15%, from the prior year. The total consumer provision for credit losses was $545 mln, down $92 mln from the prior year. The current-quarter consumer provision included a $1.2 bln reduction in the allowance for loan losses reflecting improved delinquency trends and lower estimated losses in the mortgage and credit card portfolios. The Firm's allowance for loan losses to end-of-period loans retained1 was 2.27%, compared with 3.11% in the prior year. The Firm's nonperforming assets totaled $11.6 bln at March 31, 2013, down from $11.7 bln in the prior quarter and down from $12.0 bln in the prior year. Noninterest expense was $15.4 bln, down $2.9 bln, or 16%, compared with the prior year. The prior-year noninterest expense included $2.5 bln of additional litigation reserves.
Announced along with CCAR results in March -- The Board intends to increase the second-quarter common stock dividend to $0.38 per share from the current $0.30 per share; the Firm repurchased $2.6 bln of common equity in the first quarter and is authorized to repurchase an additional $6 bln of common equity through the first quarter of 2014. "We are seeing positive signs that the economy is healthy and getting stronger... As I said in my letter to shareholders distributed this week in the 2012 annual report, we have work to do to strengthen our controls and carry out our compliance mission. To do so, we have reprioritized our business agenda to focus on this critical effort -- it is the top priority for our company. There is no room for compromise in meeting our obligations to comply with the new regulatory requirements and ensure that our systems, practices, controls, technology and, above all, culture meet the highest standards. And we will continue to work with our regulators on our common interest -- to build and sustain a strong and safe financial system." Consumer & Community Banking deposits were up 10%; mortgage originations were up 37% to $52.7 bln; Credit Card sales volume1 was up 9%. Consumer & Community Banking (CCB) Net income was $2.6 bln, compared with $2.9 bln in the prior year. Net revenue was $11.6 bln, a decrease of $748 mln, or 6%, compared with the prior year.
Net interest income was $7.2 bln, down $179 mln, or 2%, driven by lower deposit margins and lower loan balances due to portfolio runoff, largely offset by higher deposit balances. Noninterest revenue was $4.4 bln, a decrease of $569 mln, or 11%, driven by lower mortgage fees and related income. Mortgage originations were $52.7 bln, up 37% from the prior year and 3% QoQ Corp and Investment Bank Net income was $2.6 bln, up 28% compared with the prior year. These results reflected higher net revenue and lower noninterest expense. Net revenue was $10.1 bln, compared with $9.3 bln in the prior year. Net revenue included a $126 mln gain from debit valuation adjustments on structured notes and derivative liabilities resulting from the widening of the Firm's credit spreads; the prior year included a loss from DVA of $907 mln. Excluding the impact of DVA, net income was $2.5 bln and net revenue was $10.0 bln, both down 2% from the prior year. Ranked #1 in Global Investment Banking Fees for the three months ended March 31, 2013. Ranked #1 in Global Debt, Equity and Equity-related; #1 in Global Long-Term Debt; #1 in Global Syndicated Loans; #1 in Global Announced M&A; and #6 in Global Equity and Equity-related, based on volume, for the three months ended March 31, 2013. Commercial Banking Net revenue was $1.7 bln, an increase of $16 mln, essentially flat compared with the prior year.
Net interest income was $11.1 bln, down $742 mln, or 6%, compared with the prior year, reflecting the impact of low interest rates, as well as lower loan yields due to competitive pressures and portfolio run-off, lower investment securities yield, and limited reinvestment opportunities, partially offset by lower long-term debt costs, primarily due to a change in mix and lower deposit costs. Fortress balance sheet strengthened: Basel I Tier 1 common1 of $143 bln, or 10.2%; Estimated Basel III Tier 1 common1 of 8.9%, up from 8.7% in the prior quarter The provision for credit losses was $617 mln, down $109 mln, or 15%, from the prior year. The total consumer provision for credit losses was $545 mln, down $92 mln from the prior year. The current-quarter consumer provision included a $1.2 bln reduction in the allowance for loan losses reflecting improved delinquency trends and lower estimated losses in the mortgage and credit card portfolios. The Firm's allowance for loan losses to end-of-period loans retained1 was 2.27%, compared with 3.11% in the prior year. The Firm's nonperforming assets totaled $11.6 bln at March 31, 2013, down from $11.7 bln in the prior quarter and down from $12.0 bln in the prior year. Noninterest expense was $15.4 bln, down $2.9 bln, or 16%, compared with the prior year. The prior-year noninterest expense included $2.5 bln of additional litigation reserves.
Announced along with CCAR results in March -- The Board intends to increase the second-quarter common stock dividend to $0.38 per share from the current $0.30 per share; the Firm repurchased $2.6 bln of common equity in the first quarter and is authorized to repurchase an additional $6 bln of common equity through the first quarter of 2014. "We are seeing positive signs that the economy is healthy and getting stronger... As I said in my letter to shareholders distributed this week in the 2012 annual report, we have work to do to strengthen our controls and carry out our compliance mission. To do so, we have reprioritized our business agenda to focus on this critical effort -- it is the top priority for our company. There is no room for compromise in meeting our obligations to comply with the new regulatory requirements and ensure that our systems, practices, controls, technology and, above all, culture meet the highest standards. And we will continue to work with our regulators on our common interest -- to build and sustain a strong and safe financial system." Consumer & Community Banking deposits were up 10%; mortgage originations were up 37% to $52.7 bln; Credit Card sales volume1 was up 9%. Consumer & Community Banking (CCB) Net income was $2.6 bln, compared with $2.9 bln in the prior year. Net revenue was $11.6 bln, a decrease of $748 mln, or 6%, compared with the prior year.
Net interest income was $7.2 bln, down $179 mln, or 2%, driven by lower deposit margins and lower loan balances due to portfolio runoff, largely offset by higher deposit balances. Noninterest revenue was $4.4 bln, a decrease of $569 mln, or 11%, driven by lower mortgage fees and related income. Mortgage originations were $52.7 bln, up 37% from the prior year and 3% QoQ Corp and Investment Bank Net income was $2.6 bln, up 28% compared with the prior year. These results reflected higher net revenue and lower noninterest expense. Net revenue was $10.1 bln, compared with $9.3 bln in the prior year. Net revenue included a $126 mln gain from debit valuation adjustments on structured notes and derivative liabilities resulting from the widening of the Firm's credit spreads; the prior year included a loss from DVA of $907 mln. Excluding the impact of DVA, net income was $2.5 bln and net revenue was $10.0 bln, both down 2% from the prior year. Ranked #1 in Global Investment Banking Fees for the three months ended March 31, 2013. Ranked #1 in Global Debt, Equity and Equity-related; #1 in Global Long-Term Debt; #1 in Global Syndicated Loans; #1 in Global Announced M&A; and #6 in Global Equity and Equity-related, based on volume, for the three months ended March 31, 2013. Commercial Banking Net revenue was $1.7 bln, an increase of $16 mln, essentially flat compared with the prior year.
