Money Matters - Simplified
JP Morgan’s profit beats expectations
JPMorgan Chase & Co reported better-than-expected first-quarter profit, propped up by investment banking performance New York, April 16: At a time when banks in the United States of America are falling like nine pins, JP Morgan Chase & Co (NYSE: JPM) reported better-than-expected first-quarter profits.
Fixed-income trading revenue at the second-largest U.S. bank ascended to a record high.
JP Morgan’s revenue jumped 48 percent to $25.03 billion. However, profits fell 10 percent to $2.1 billion from a comparative period last year. Its shares rose to $32.90 in morning trade on the New York Stock Exchange.
However, due to the ever deepening recession and mounting joblessness, bad loan provisions climbed. Owing to increase in losses in its consumer banking business, the bank had to set aside more money to provide for losses.
Chief Executive Officer Jamie Dimon said, “It is reasonable to expect additional increases to credit reserves if the economic environment worsens. 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.”
Dimon termed the quarter as "historic" for the financial services behemoth. He mentioned that the bank has captured larger market shares across sectors. The acquisitions of Bear Stearns Cos and Washington-based thrift Washington Mutual Inc stood the bank in good stead.
One of the oldest financial services firms in the world, JP Morgan is bigger than any other U.S. banking institution, in terms of market capitalization. It is termed as one of the ‘Big Four Banks’ of United States along with Bank of America, Citigroup and Wells Fargo.
The New York based bank has staged a dramatic turnaround. Not so long ago, it was compelled to take government support under Troubled Asset Relief Program (TARP). Today, it is flush with funds to repay that $25 billion bailout money. A proud Dimon said, “We could pay it back tomorrow.”
Rob Lutts, chief investment officer of Cabot Money Management in Salem, Massachusetts, termed the ability to repay the TARP funds as a psychological boost to the investors. He said, “That's probably the most positive thing any investor could hear from them.”
