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JPMorgan Chase, America's largest bank reported better than expected Q2 earnings Tuesday before the open. $JPM announced better revenue and profits led by Consumer & Community Banking. Net income was helped by income tax benefits of $768 million Wells Fargo $WFC and Goldman Sachs also reported Tuesday.

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JPMorgan Chase & Co NYSE: JPM · Reported Earnings Before Open Tuesday

$2.82 Beat $2.50 EPS Forecast AND $29.60 Beat $28.88 billion forecast in revenue

Earnings

JPMorgan Chase & Co (NYSE: JPM) reported higher earnings on modest growth in revenues during the second quarter. The bank overcame despite headwinds associated with low-interest rates. Net income rose to $2.82 per share from $2.29 per share a year ago, helped by income tax benefits of $768 million related to the resolution of certain tax audits. This beat the Street projection of $2.50 per share. Revenues improved 4% to $29.6 billion, riding on high consumer confidence and strong loan growth. Analysts had projected Q2 revenues of just $28.88 billion.

Earnings Preview

  • 2Q adjusted EPS estimate $2.50 (range $2.40 to $2.56)
  • 2Q adjusted revenue estimate $28.88 billion (range $28.28 billion to $29.61 billion)
  • 4Q equities trading revenue estimate $1.82 billion (Bloomberg MODL, 7 ests.)
  • FICC $3.33 billion (7 ests.)
  • I-banking revenue est. $1.82 billion
  • 2Q Preview Call 8:30am (New York time), (866) 541-2724

JPMorgan's profit margin is well above average at 30.6% as is the operating margin of 39.3%. However the return on equity is average at 12.5% and the return on assets is low at 1.23%. The company earned $2.22 in the second quarter of 2018, this would be growth in earnings by 12.6% on a year over year basis. The revenue forecast would mean growth of 1.8%.

JPM stock has outperformed other big banks over the past year, JPMorgan Chase is up 10.5%, versus a 8.14% return of the S&P The stock has moved up around 27% since the December low&and slightly above Citi and Bank of America. Looking at just 2019, the S&P bank index has risen 17.5% year-to-date while the S&P 500 has risen 19.7%. Wells Fargo has faced many obstacles, including not having a CEO, and has lagged the other banks and the overall market over the last year.

In his annual letter to shareholders published last quarter, CEO Dimon said he doesn't expect a recession anytime soon and he doesn't worry too much about loan growth; it's just an expected feature of the regular business cycle.

"We do not worry about loan growth," the CEO wrote. "It is most definitely an outcome of how we manage credit and client decisions. We will not stretch, ever, to show growth in loans."

In the JPMorgan conference call watch for macro expectations and risk given the recent weakness in many asset classes with a focus on costs. Higher interest rates boosted the results even with home lending revenue down in the past.

JPMorgan Chase & Co NYSE: JPM

Market Reaction Pre-market $113.41 USD −0.46 (-0.40%)

Highlights

  • Consumer and Community Banking business rose 11% revenue growth despite weakness in home lending.
  • Corporate and Investment Banking division fell 3% as dismal trading volumes continued, driven by a slowing economy and geopolitical tensions.
  • Like Citigroup (NYSE: C), JPMorgan benefited from the IPO of Tradeweb, excluding which, markets revenues would have been down 6%.
  • Fixed Income markets revenue was down 3%
  • Equity Markets revenue plunged 12% driven by lower client activity.
  • With the popularity of its Sapphire card among millennials, credit card sales volume increased by 11% in Q2.

CEO Jamie Dimon said, “Double-digit growth in credit card sales and merchant processing volumes reflected healthy consumer spending and drove 8% growth in credit card loans, while mortgage and auto originations showed solid improvement, and we continued to attract new deposits, up 3%.

JPMorgan Chase Co Q2 2019 Earnings

JPMorgan Chase Q1 Earnings Recap

$2.65 Beat $2.37 EPS Forecast AND $29.9B Beat $28.54 billion forecast in revenue

Earnings

JPMorgan said profit rose 5 percent to $9.18 billion, or $2.65 a share, compared with analysts’ average estimate of $2.37 a share. Revenue rose 5 percent to $29.9 billion as net interest income grew 8 percent, thanks to the “impact of higher rates,” J.P. Morgan said. Revenues were expected to be $28.54 billion, up rom the year-ago quarter. Shares Closed $105.31 Friday. The stock has a 52-week range of $91.11 to $119.24.

In an annual letter to shareholders published last week, CEO Dimon said he doesn't expect a recession anytime soon and he  doesn't worry too much about loan growth; it's just an expected feature of the regular business cycle.

"We do not worry about loan growth," the CEO wrote. "It is most definitely an outcome of how we manage credit and client decisions. We will not stretch, ever, to show growth in loans."

In the JPMorgan conference call watch for macro expectations and risk given the recent weakness in many asset classes with a focus on costs. Higher interest rates boosted the results even with home lending revenue down in the past.

JPMorgan Chase & Co NYSE: JPM

Market Reaction Pre-market 109.24 +3.01 (+2.83%)

Highlights

“We had record revenue and net income, strong performance across each of our major businesses and a more constructive environment,” CEO Jamie Dimon said in a statement. “Even amid some global geopolitical uncertainty, the U.S. economy continues to grow, employment and wages are going up, inflation is moderate, financial markets are healthy and consumer and business confidence remains strong.”

  • Consumer lending division profit rose 19 percent to $3.96 billion as revenue climbed 9 percent to $13.8 billion. The division grew the profit margin on deposits and grew loans across credit card and auto units.
  • Provision for credit losses stayed flat from a year earlier at $1.3 billion
  • Q1 trading revenue dropped 17 percent to $5.5 billion.
  • Excluding the impact of a year-earlier accounting change, bond trading declined 8 percent and stock trading revenue dropped 13 percent.
  • Banking revenue rose 8 percent to $3.2 billion on higher debt underwriting and advisory fees. The overall division’s profit of $3.25 billion was 18 percent lower than a year earlier.
  • J.P. Morgan’s asset management division profit dropped 14 percent to $661 million on lower market levels and brokerage activity in the quarter.
  • JPM commercial bank posted profit of $1.05 billion, 3 percent higher than a year earlier.

JPM Earnings Q1 2019

The bank continued making long-term investments in its business. J.P. Morgan said it’s expanding its branch network to cover nearly all of the U.S. population by 2022. It also announced the first cryptocurrency from a major U.S. bank, and pledged $350 million to boost the job prospects of people in under-served communities.

      • JPM CEO Jamie Dimon is also chairman of the Business Roundtable for the Trump administration. 

Source: JPM, AlphaStreet

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