JPMorgan Blows Away The Street

jamiedimon tbi

At least on the bottom line, JPMorgan (JPM) just blew away estimates, earnings $.28 per share, compares to estimates of $.04. Following Goldman’s number earlier this week, it’s the second monster financial earnings report — though in the weird way of Wall Street, both companies were always expected to blow away expectations.

Shares are trading up marginally in pre-market action.

From the release:

Jamie Dimon, Chairman and Chief Executive Officer, commented on the results: “We are pleased that, despite a continued difficult economic environment, we were able to report $2.7 billion in earnings and record revenue of almost $28 billion. Of particular note, the Investment Bank reported record overall revenue for the first half of the year, which included record fees and Fixed Income Markets revenue for this quarter. In addition, Commercial Banking, Asset Management, Treasury & Securities Services and Retail Banking each delivered another quarter of solid performance. These results were negatively affected by the continued high levels of credit costs in Consumer Lending and Card Services, which we expect will remain elevated for the foreseeable future.”

Regarding balance sheet strength, Dimon added: “Even after further strengthening our credit reserves by $2 billion to $30 billion and repaying the $25 billion of TARP capital, the firm ended the quarter with a very strong Tier 1 Capital ratio of 9.7% and a Tier 1 Common ratio of 7.7%. With these additions to reserves, we now have an extremely high loan loss coverage ratio of 5%.”

Dimon further remarked: “Throughout this crisis, we have remained committed to doing our part to help bring stability to the communities in which we operate and to the financial system overall. During the quarter, we maintained our efforts to support economic recovery and to help keep people in their homes. We continued to lend, extending approximately $150 billion in new credit to consumer and corporate customers. We approved 138,000 trial mortgage modifications, bringing total foreclosures prevented since 2007 to 565,000 – a number we expect to continue to grow.”

Commenting on the second half of 2009, Dimon concluded: “While we do not know if the economy will deteriorate further, we feel confident that, with our strong capital and reserve levels and significant earnings power, we can continue to reinvest in our businesses and do well for our clients, communities and shareholders over the long term.”

What’s weak? Retail financial services. Check out the revenue growth from last year (thanks WaMu!), but the total lack of profits.


Says JPMorgan:

he provision for credit losses was $3.8 billion, an increase of $2.3 billion from the prior year. Weak economic conditions and housing price declines continued to drive higher estimated losses for the home equity and mortgage loan portfolios. The provision included a $1.2 billion addition to the allowance for loan losses, compared with an addition of $600 million in the prior year and $1.7 billion in the prior quarter. Home equity net charge-offs were $1.3 billion (4.61% net charge-off rate2), compared with $511 million (2.16% net charge-off rate) in the prior year. Subprime mortgage net charge-offs were $410 million (11.50% net charge-off rate2), compared with $192 million (4.98% net charge-off rate) in the prior year. Prime mortgage net charge-offs were $481 million (3.07% net charge-off rate2), compared with $104 million (1.08% net charge-off rate) in the prior year.

And of course the environment for credit cards remains absolutely brutal:


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