These Two Slides Capture Why JP Morgan's Earnings Stunk

American banking giant JP Morgan just reported Q1 revenue and earnings that fell sharply year-over-year.

Earnings per share fell to $US1.28 from $US1.59 a year ago, which was worse than the $US1.40 expected by analysts.

Revenue fell 8% to $US23.9 billion, which was worse than the $US24.4 billion expected.

The stock is down by around 2% in pre-market trading.

Banks like JP Morgan continue to feel the pain from two trends: 1) falling mortgage activity and 2) falling fixed income trading activity.

The weakness is captured in two slides from JP Morgan’s 22-slide earnings presentation.

The first slide summarizes the consumer and community banking unit, which shows that mortgage production revenue plunged by 76% thanks to a 68% dive in mortgage originations. In its earnings release, managment said mortgage application volume fell 57% year-over-year and 17% from the previous quarter. This unit has seen 14,000 layoffs in the last year.

The second slide summarizes the corporate and investment bank division. This is the unit that captures the firm’s trading activies. As you can see, markets revenue is down 17% largely due to a 21% plunge in fixed income markets activity.

Analysts expect these two trends to affect all of the big banks.

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