Banking, finance, and taxes

JPMorgan Sails Past Earnings, Still Healthy Discount To Book Value (JPM)

J.P. Morgan Chase & Co. (NYSE: JPM) has reported its first-quarter earnings results ahead of expectations.  The top bank in America earned net income of $5.4 billion in the first quarter versus $5.6 billion in the first quarter of 2011.  The key earnings per share data was $1.31 EPS versus $1.28 EPS a year ago.  Revenue was up 6% year over year to about $27.4 billion.  To show how much further ahead of estimates this was, Thomson Reuters had consensus expectations of only $1.18 EPS on $24.6 billion in sales expected.

The bank’s return on tangible common equity was 16%, up from 11% in the prior sequential quarter and versus 18% in the prior year. J.P. Morgan also ended the quarter with a Basel I Tier 1 common ratio of 10.4% and it projects that its Basel III Tier 1 common ratio was approximately 8.4% at the end of the first quarter.

The quarter reflected positive credit trends in consumer real estate and credit card portfolios with losses declining and a lower loss reserve by about $1.8 billion.  Jamie Dimon did warn that he still expects to see elevated levels of costs and losses associated with mortgage-related issues for a while longer.

We have highlighted how book value may become more important as 2012 matures and in the years beyond.  The book value of the bank was $47.60 at the end of the first quarter.  That compares to $46.59 the previous quarter and compares to $43.34 in the first quarter of 2011.

J.P. Morgan shares closed at $44.84 on Thursday and shares have indicated up slightly.


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