{"id":183097,"date":"2010-01-15T07:02:00","date_gmt":"2010-01-15T12:02:00","guid":{"rendered":"http:\/\/www.businessinsider.com\/jpmorgan-earnings-blow-past-expectations-revenue-looks-light-2010-1"},"modified":"2010-01-15T07:02:00","modified_gmt":"2010-01-15T12:02:00","slug":"jpmorgan-earnings-blow-past-expectations-revenue-looks-light-consumer-lending-still-very-ugly","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/183097","title":{"rendered":"JPMorgan Earnings Blow Past Expectations, Revenue Looks Light, Consumer Lending Still Very Ugly"},"content":{"rendered":"

\"amieDimon-0909-1\"<\/em>And they’re out<\/a>.<\/p>\n

EPS of $.74 per share blew past estimates of $.61 per share. But revenue of $25.2 billion may be a bit light.<\/p>\n

Analysts had been looking for $26.8 billion.<\/p>\n

The stock is currently drifting lower by less than a buck on the news.<\/p>\n

Here’s Jamie Dimon’s commentary on the numbers:<\/p>\n

“We are gratified that we generated earnings of $3.3 billion for the fourth quarter and nearly $12 billion for the year. Though these results showed improvement, we acknowledge that they fell short of both an adequate return on capital and the firm’s earnings potential. We benefited from the diversity of our leading franchises, as demonstrated by the continued earnings strength of our Investment Bank, Commercial Banking, Asset Management and Retail Banking franchises. We are proud that, throughout these tumultuous times, we never stopped investing in the fundamental growth drivers of our consumer businesses – such as checking and credit card accounts in our Retail Banking and Card Services franchises – and have developed new products and services to meet the needs of consumers and small businesses. While we are seeing some stability in delinquencies, consumer credit costs remain high, and weak employment and home prices persist. Accordingly, we remain cautious.”<\/p>\n

“In the fourth quarter, we further strengthened our credit reserves to nearly $33 billion, or 5.5% of total loans. Our earnings generated additional capital, and we ended 2009 with a very strong Tier 1 Capital ratio of 11.1% and a Tier 1 Common ratio of 8.8%<\/strong><\/span>. We remain confident that this capital and reserve strength, combined with our significant earnings power, will allow us to meet the uncertainties that lie ahead and still continue investing in our businesses and serving our clients and shareholders over the long term.”<\/p>\n

Here, meanwhile, is further color on consumer lending, which is still looking very ugly:<\/p>\n

Consumer Lending<\/strong> reported a net loss of $1.4 billion, compared with a net loss of $416 million in the prior year. The decrease was driven by lower net revenue, a higher provision for credit losses and higher noninterest expense.<\/p>\n

Net revenue was $3.1 billion, down by $1.0 billion, or 24%, from the prior year. The decrease was driven by lower mortgage fees and related income and lower loan balances, partially offset by wider loan spreads. Mortgage fees and related income decreased due to lower mortgage production revenue and lower net mortgage servicing revenue. Mortgage production revenue was negative $192 million, compared with positive $62 million in the prior year, as an increase in reserves for the repurchase of previously-sold loans was largely offset by wider margins on new originations and the absence of markdowns of the mortgage warehouse in the prior year. Operating revenue, which represents loan servicing revenue net of other changes in fair value of the MSR asset, was $564 million, up by $41 million. MSR risk management results were $109 million, compared with $1.4 billion in the prior year.<\/p>\n

The provision for credit losses was $4.0 billion, compared with $3.3 billion in the prior year. The provision reflected an increase in the allowance for loan losses of $1.5 billion in the current quarter, resulting in an allowance for loan losses to ending loans retained1<\/sup> of 5.04%, compared with 3.16% in the prior year (see Retail Financial Services discussion of the provision for credit losses, above, for further detail).<\/p>\n

Noninterest expense was $1.7 billion, up by $215 million, or 14%, from the prior year, reflecting higher servicing and default-related expense.<\/p>\n

See the full presentation and listen to the conference call here — ><\/strong><\/a><\/p>\n

Join the conversation about this story »<\/a><\/p>\n

See Also:<\/b><\/p>\n