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Last Update: 16-Jan-13 08:17 ET
JP Morgan shares little changed following beat on EPS
JPMorgan Chase (JPM $46.07 -0.28) reported fourth quarter earnings of $1.39 per share, $0.20 better than the Capital IQ consensus Estimate of $1.19, while revenues rose 10.2% year/year to $23.65 billion versus the $24.21 bln consensus. One-time Items Fourth-quarter results included the following significant items $900 million pretax expense ($0.14 per share after-tax reduction in earnings) for mortgage-related matters in Mortgage Banking, predominantly the Independent Foreclosure Review settlement $567 million pretax loss ($0.09 per share after-tax reduction in earnings) from debit valuation adjustments in the Corporate & Investment Bank $620 million after-tax benefit ($0.16 per share after-tax increase in earnings) from tax adjustments in Corporate $700 million pretax benefit ($0.11 per share after-tax increase in earnings) from reduced mortgage loan loss reserves in Real Estate Portfolios. Capital Fortress balance sheet strengthened Basel I Tier 1 common of $140 billion, or 11.0%, up from 10.4% in the prior quarter Estimated Basel III Tier 1 common of 8.7%, up from 8.4% in the prior quarter. Loan loss reserves of $21.9 billion; Global Liquidity Reserve of $491 billion. Dimon Comments "We continued to see favorable credit conditions across our wholesale loan portfolios and strong credit performance in our credit card portfolio, where charge-off rates remain at historic lows. The real estate portfolios, while at elevated levels of losses, continued to show improvement as the housing market and economy continued to recover. As a result, we reduced the related allowance for credit losses by $700 million in the fourth quarter and we are likely to continue to see reductions in the allowance as the environment improves."
CBB Unit Net income was $2.0 billion, compared with $1.6 billion in the prior year. Net revenue was $12.4 billion, an increase of $1.2 billion, or 10%, compared with the prior year. Net interest income was $7.3 billion, down $220 million, or 3%, driven by lower deposit margins and lower loan balances due to portfolio runoff, largely offset by higher deposit balances. Noninterest revenue was $5.1 billion, an increase of $1.4 billion, or 37%, driven by higher mortgage fees and related income. The provision for credit losses was $1.1 billion, compared with $1.8 billion in the prior year and $1.9 billion in the prior quarter. The current-quarter provision reflected a $700 million reduction in the allowance for loan losses and total net charge-offs of $1.8 billion. The prior-quarter provision reflected a $955 million reduction in the allowance for loan losses and total net charge-offs of $2.8 billion, including $880 million of incremental charge-offs reported in accordance with regulatory guidance for Chapter 7 loans. Noninterest expense was $8.0 billion, an increase of $1.2 billion from the prior year, driven by costs related to mortgage-related matters, including the impact of the Independent Foreclosure Review settlement and the write-off of intangible assets associated with a non-strategic relationship in Credit Card. Deposits Average total deposits were $404.0 billion, up 10% from the prior year and 3% from the prior quarter; deposit growth rates were among the best in the industry (as of November 2012). Deposit margin was 2.44%, compared with 2.76% in the prior year and 2.56% in the prior quarter. IB Unit Net income was $2.0 billion, up significantly from the prior year. These results reflected higher net revenue and benefit from the provision for credit losses, partially offset by higher noninterest expense.
Net revenue was $7.6 billion, compared with $6.3 billion in the prior year. Net revenue included a $567 million loss from debit valuation adjustments on certain structured and derivative liabilities resulting from the tightening of the Firm's credit spreads; the prior year included the same size loss from DVA of $567 million. Excluding the impact of DVA, net income was $2.4 billion, up $1.0 billion, or 77%, from the prior year, and net revenue was $8.2 billion, up $1.3 billion, or 19%, from the prior year. Banking revenue was $3.2 billion, compared with $2.4 billion in the prior year. Securities Services revenue was $995 million, up 2% from the prior year. Credit Adjustments & Other was a net loss of $586 million, compared with a loss of $532 million in the prior year; both periods were driven predominantly by the impact of DVA.
Return on equity was 17% on $47.5 billion of average allocated capital (20%1 excluding DVA). IB Fees Investment banking fees were $1.7 billion (up 54%), which consisted of record debt underwriting fees of $990 million (up 79%), equity underwriting fees of $265 million (up 57%), and advisory fees of $465 million (up 17%). TSS Unit Treasury Services revenue was $1.1 billion, up 1% from the prior year. Lending revenue was $382 million, compared with $279 million in the prior year, driven by higher fees and net interest income, as well as lower mark-to-market losses from hedges of retained loans.
Markets & Investor Services revenue was $4.5 billion, up 16% from the prior year. Fixed Income and Equity Markets combined revenue was $4.1 billion, up 19% from the prior year, driven by solid client revenue and improved performance in credit-related products.
London Whale The portion of the synthetic credit portfolio transferred from the Chief Investment Office in Corporate to the CIB on July 2, 2012 experienced a modest loss during the current quarter, which was included in Fixed Income Markets revenue.
CBB Unit Net income was $2.0 billion, compared with $1.6 billion in the prior year. Net revenue was $12.4 billion, an increase of $1.2 billion, or 10%, compared with the prior year. Net interest income was $7.3 billion, down $220 million, or 3%, driven by lower deposit margins and lower loan balances due to portfolio runoff, largely offset by higher deposit balances. Noninterest revenue was $5.1 billion, an increase of $1.4 billion, or 37%, driven by higher mortgage fees and related income. The provision for credit losses was $1.1 billion, compared with $1.8 billion in the prior year and $1.9 billion in the prior quarter. The current-quarter provision reflected a $700 million reduction in the allowance for loan losses and total net charge-offs of $1.8 billion. The prior-quarter provision reflected a $955 million reduction in the allowance for loan losses and total net charge-offs of $2.8 billion, including $880 million of incremental charge-offs reported in accordance with regulatory guidance for Chapter 7 loans. Noninterest expense was $8.0 billion, an increase of $1.2 billion from the prior year, driven by costs related to mortgage-related matters, including the impact of the Independent Foreclosure Review settlement and the write-off of intangible assets associated with a non-strategic relationship in Credit Card. Deposits Average total deposits were $404.0 billion, up 10% from the prior year and 3% from the prior quarter; deposit growth rates were among the best in the industry (as of November 2012). Deposit margin was 2.44%, compared with 2.76% in the prior year and 2.56% in the prior quarter. IB Unit Net income was $2.0 billion, up significantly from the prior year. These results reflected higher net revenue and benefit from the provision for credit losses, partially offset by higher noninterest expense.
Net revenue was $7.6 billion, compared with $6.3 billion in the prior year. Net revenue included a $567 million loss from debit valuation adjustments on certain structured and derivative liabilities resulting from the tightening of the Firm's credit spreads; the prior year included the same size loss from DVA of $567 million. Excluding the impact of DVA, net income was $2.4 billion, up $1.0 billion, or 77%, from the prior year, and net revenue was $8.2 billion, up $1.3 billion, or 19%, from the prior year. Banking revenue was $3.2 billion, compared with $2.4 billion in the prior year. Securities Services revenue was $995 million, up 2% from the prior year. Credit Adjustments & Other was a net loss of $586 million, compared with a loss of $532 million in the prior year; both periods were driven predominantly by the impact of DVA.
Return on equity was 17% on $47.5 billion of average allocated capital (20%1 excluding DVA). IB Fees Investment banking fees were $1.7 billion (up 54%), which consisted of record debt underwriting fees of $990 million (up 79%), equity underwriting fees of $265 million (up 57%), and advisory fees of $465 million (up 17%). TSS Unit Treasury Services revenue was $1.1 billion, up 1% from the prior year. Lending revenue was $382 million, compared with $279 million in the prior year, driven by higher fees and net interest income, as well as lower mark-to-market losses from hedges of retained loans.
Markets & Investor Services revenue was $4.5 billion, up 16% from the prior year. Fixed Income and Equity Markets combined revenue was $4.1 billion, up 19% from the prior year, driven by solid client revenue and improved performance in credit-related products.
London Whale The portion of the synthetic credit portfolio transferred from the Chief Investment Office in Corporate to the CIB on July 2, 2012 experienced a modest loss during the current quarter, which was included in Fixed Income Markets revenue.
