Banking & Finance

J.P. Morgan Company Earnings Surges to $6.5 Billion for Second Quarter

J.P. Morgan Chase & Co. (NYSE: JPM) is now out with its second quarter company earnings report. The DJIA component is the first of the major banks to post earnings, with results of $1.60 in earnings per share and $26.0 billion in revenues. Thomson Reuters had estimates of $1.44 per share and $24.8 billion in sales. The issues from the London Whale debacle and the attack on Jamie Dimon are behind the bank, and the tone of the report is mostly positive as the quarterly earnings hit $6.5 billion.

We would want investors to keep in mind that J.P. Morgan shares were up about 27% year-to-date and were up about 65% from their 52-week lows going into the earnings. The bank reported a stated book value per share of $52.54 versus $52.02 last quarter, and its tangible book value rose to $40.04 per share versus $39.54 per share.

J.P. Morgan shares closed at $55.14 on Thursday. Initially the stock was down 0.4% but the second wave of trading has shares up 0.4%. The consensus analyst price target is $58.29 per share. Here are some of the details that the analysts and investors will be looking at:

  • Consumer and community banking deposits were up 10%.
  • Mortgage originations were up 12% at $49.0 billion.
  • Credit card sales volume was up 10% to a record $105.2 billion.
  • Auto originations were up 17%.
  • Client assets were up 10% to $2.2 trillion.
  • Loan balances were a record $86.0 billion.
  • Basel I Tier 1 common ratio was 10.4% at $147 billion.
  • the estimated Basel III Tier 1 common ratio was 9.3%.
  • Its estimated Basel III liquidity coverage ratio was 118%.

We would note that J.P. Morgan said earnings included several significant items: a $950 million pretax benefit ($0.15 per share increase), a $550 million pretax benefit ($0.09 per share increase) and a $600 million pretax expense ($0.09 per share after-tax decrease). These items may be acting as a drag against some of the enthusiasm.