 |
|
| View previous topic :: View next topic |
| Author |
JP Morgan (JPM) |
HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11740
Location: Los Angeles, California
|
 Posted: Wed Jul 18, 2007 9:38 am Post subject: JP Morgan (JPM) |
 |
|
JPM beat estimates but folks are now worried about further losses on loans as, according to the article, "even borrowers with good credit defaulted on home equity loans." Subprime and declining home prices not only causing the housing ATM to run dry, but also causing home equity loan defaults as well.
------------------------------------------------------------------------------
JPMorgan profit hurt by home equity loans
Wednesday July 18, 11:30 am ET
By Tim McLaughlin
NEW YORK (Reuters) - JPMorgan Chase & Co. (NYSE:JPM - News) said on Wednesday it tripled the amount set aside for loan losses as even borrowers with good credit defaulted on home equity loans, hurting the bank's quarterly profit.
The negative trend provides a new worry for investors. Until now, most of the angst has been focused on subprime lending, or loans to people with weak credit.
JPMorgan Chief Financial Officer Mike Cavanagh said losses on home equity loans to prime borrowers, or those with good credit, will steepen, partly because U.S. housing prices have flattened or fallen in some areas.
"The loan loss reserve increase has investors spooked," said Kenneth Crawford, a portfolio manager at Argent Capital, which owns about $12 million in JPMorgan stock. "Credit quality is decreasing and it's a moving target."
JPMorgan shares were down $1.85, or 3.7 percent, to $48.07, in morning trade on the New York Stock Exchange.
The No. 3 U.S. bank said second-quarter net income was $4.2 billion, or $1.20 a share, compared with $3.5 billion, or 99 cents a share, a year earlier. That beat analysts' average estimate of $1.08 a share, helped by a sharp rise in investment banking revenue.
But the bank set aside $1.53 billion for loan losses, up from $493 million a year earlier. About a one-third of the increase resulted from higher loss estimates on home equity loans where borrowers had little equity in houses whose values are falling.
"It's definitely a change in trend that we're reacting to," Cavanagh told reporters on a conference call.
The bank was bolstering its reserve for loan losses to make the transition from a benign credit environment to one that is expected to get worse, he said.
"We think these reserve additions will cover us for the carrythrough of the trends we're already seeing," Cavanagh said.
Deutsche Bank analyst Mike Mayo estimated the extra money set aside for loan losses reduced JPMorgan's earnings by about $350 million, or 10 cents a share.
WEAK SPOTS
JPMorgan said regional banking and auto finance were weak spots in the quarter, with profit in those areas declining.
The bank's retail finance division set aside $587 million, part of the overall loan loss reserve number, up from $100 million a year earlier, to reflect weak housing prices and the resulting increase in losses on home equity loans.
Cavanagh said the bank had problems with home equity loans started by independent mortgage brokers. The bank has since tightened underwriting standards and raised prices to reflect elevated risk.
JPMorgan's overall net revenue rose 25 percent to $18.9 billion, higher than the $17.5 billion expected by analysts.
Investment banking continued to be a bright spot as JPMorgan raked in fees from merger and acquisition advice. Investment banking revenue surged 34 percent to $5.8 billion, from $4.3 billion a year earlier. The first quarter was better, though, at $6.3 billion.
The bank's retail financial services division, which includes home loans, credit cards and auto financing, reported $785 million in net income, down 10 percent.
JPMorgan's asset management business saw profit soar 44 percent to $493 million as the unit took in more money from clients. The unit now has $1.1 trillion under management. |
|
| Back to top |
|
 |
| Author |
JP Morgan (JPM) Replies |
HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11740
Location: Los Angeles, California
|
|
| Back to top |
|
|
HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11740
Location: Los Angeles, California
|
| Posted: Fri May 11, 2012 4:14 pm Post subject: |
|
|
Morningstar relatively bullish on JPM.
| Quote: | | J.P. Morgan JPM announced in a last-minute conference call Thursday that it has taken $2 billion in losses from credit derivative trades out of its chief investment office. J.P. Morgan now estimates that the unit will lose $800 million in the quarter, as opposed to $200 million it had previously estimated, as gains offset some of the losses. CEO Jamie Dimon called the trades "flawed, complex, poorly reviewed." J.P. Morgan also announced that its "value-at-risk" model was inadequate and that it would be going back to an older model. J.P. Morgan said that it could face another $1 billion in losses in the second quarter due to market volatility. While the announcement on its surface is shocking, especially considering J.P. Morgan's stellar reputation when it comes to risk controls, we do not anticipate the losses will be material to J.P. Morgan's long term fair value. We are, however, monitoring the situation closely for signs that this could be an early indication of larger problems at the bank. |
|
|
| Back to top |
|
|
HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11740
Location: Los Angeles, California
|
| Posted: Fri Jan 13, 2012 1:55 pm Post subject: |
|
|
Morningstar on JPM's 4Q earnings.
| Quote: | | JP Morgan Chase JPM reported net income of $19 billion, or $4.48 per share for 2011, slightly below our expectations on the revenue front, and reflecting the adverse impact of a $567 million pretax loss from debit valuation adjustments, which we exclude from our forecasts. However, our long-term expectations are essentially unchanged. We're maintaining our fair value estimate for its shares. Although balance sheet assets declined during the quarter, loans increased by 3.9%, with demand for both commercial and consumer credit appearing to grow. We think this development is not only a positive for JP Morgan, but also for the banking industry and the U.S. economy. Credit expansion should eventually result in not only a larger balance sheet, but also a wider net interest margin. Given Europe's well-documented problems, the investment bank segment posted only $726 million in net income, down more than 50% from the final quarter of the previous year. This is not a surprise to us. In addition to the aforementioned DVA charge, investment banking fees, debt and equity underwriting fees, advisory fees, and trading revenue all experienced declines. Most of these line items are volatile, and these results are not unexpected given the prevailing uncertainty in the business environment. We expect these businesses to eventually post rebounds. Credit quality continues to slowly improve. Net charge-offs were only $2.9 billion in the fourth quarter, while the bank recorded only $2.2 billion in provisions for credit losses. The bank will not be releasing reserves indefinitely, and this minor earnings tailwind shou ld taper off soon. However, we don't expect credit losses to rise much, even in the event of a "double dip" recession. More than four years since a recession officially began in December 2007, banks have turned over their balance sheets to a large extent, replacing aggressively underwritten loans with higher-quality assets. In addition to the company's allowance for loan losses, it is quite well-capitalized, in our view, with an estimated Basel III Tier 1 common ratio of 7.9% at year-end. In contrast to many of its peers, which are cutting staff, JP Morgan is actively investing in its business. Headcount posted an 8% year-over-year increase, as the bank added employees both to increase business--the bank opened 260 new branches during the year--and deal with mortgage defaults. Eventually, expenses such as the $390 million in repurchase losses will decline, but we are not currently forecasting a significant decline in total noninterest expenses. A flat market in 2011 did litt le for the asset management segment, which suffered from lower performance fees and valuations. As in other segments, lower variable compensation was offset by a larger headcount, as JP Morgan added private bankers and other personnel. JP Morgan Chase's quarterly and full-year results were driven to a large extent by its long-term strategy. Management's actions--including another $950 million in stock repurchases in the fourth quarter--clearly indicate that the bank is willing to sacrifice short-term performance for long-term value creation. This strategy could backfire in the event of a prolonged deflationary environment, but if the future is anything like the past, JP Morgan is likely to remain in the best competitive position of its large bank peers. |
|
|
| Back to top |
|
|
HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11740
Location: Los Angeles, California
|
| Posted: Tue Oct 18, 2011 12:19 pm Post subject: |
|
|
Morningstar on JPM's 3Q earnings:
| Quote: | J.P. Morgan's investment bank continues to shine.
JP Morgan Chase JPM reported net income of $4.3 billion, or $1.02 per share, for the third quarter of 2011, which was in line with our expectations. We are leaving our fair value estimate unchanged. In our view, the primary risks to our thesis and valuation are related to loan and revenue growth in a potentially extended period of economic malaise, and we therefore have focused our attention on the bank's performance in these areas.
Overall, we were pleased with the bank's loan growth in the current environment. JP Morgan's gross loan balance increased from $690 billion to $697 billion during the quarter, driven by growth in wholesale loans. Total loans in its commercial banking segment, on the other hand, increased by $4.7 billion, with balances held in the company's Treasury and securities services, asset management, and investment bank segments also increasing during the quarter. In the bank's retail financial services segment, loans fell by about $6 billion during the third quarter, due in large part to runoff of mortgage and home equity loans. We're not surprised that consumer loan growth continues to be weak, even excluding the effects of the Washington Mutual portfolio runoff, so we were encouraged that JP Morgan managed to grow credit card loans by $1.6 billion during the quarter, following several quarters of declining balances. We expect commercial lending to continue to be the main driver of loan growth in the near term.
Net interest margin continues to be a concern due to the low rate environment. Though net interest income remained flat quarter over quarter, JP Morgan's reported interest rate spread fell to 2.56% from 2.64% in the previous quarter and 2.94% in third-quarter 2010. We think JP Morgan has achieved most of the benefit from low rates on the liability side of its balance sheet, funding its assets at a cost of less than 0.6% during the quarter, but that low rates will continue to pressure yields on the company's assets. It's possible that net interest margin may take longer to rebound than we currently expect, but we think improving asset quality and any steepening of the yield curve during the next five years will account for the modest long-term expansion incorporated in our valuation. We therefore do not see a slight near-term spread compression as overly concerning.
Not surprisingly, investment banking and private equity results were hampered by a difficult quarter for the capital markets. Though JP Morgan's net peripheral European exposure is manageable at $15 billion, in our opinion, the turmoil in Europe undoubtedly affected the bank's other business. The company's private equity business posted negative net revenue of more than $500 million on write-downs and declines in the value of publicly traded securities. Investment bank net revenue totaled $6.4 billion, including debit and credit valuation adjustments, but debt and equity underwriting fees were down 37% and 47%, respectively, year over year. Our outlook for the fourth quarter is very much the same, but we’d expect the firm’s investment bank to perform better in a more normal environment. |
|
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
|
| Posted: Mon Nov 15, 2010 9:05 pm Post subject: |
|
|
Jamie going with stock buyback in lieu of (now castrated) dividend payout plan. He's plainly tired of cold-water from the authorities. No sooner is Treasury on board than Basel and Fed retract). At .9X book....time to make a statement in the business.
Or?....is he just disguising a commitment he can't guarantee?
This may or may not be bullish for JPM (institutions said to like it) but definitely downer for group.
_________________
Today is the Tomorrow you worried about Yesterday! |
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
|
| Posted: Tue Nov 02, 2010 9:59 am Post subject: |
|
|
Will this Dimon shine anymore? Bloomberg takes the shine off Wall St's favorite son:
http://www.bloomberg.com/news/2010-11-02/dimon-beset-by-75-billion-in-bad-wamu-loans-as-jpmorgan-pushes-overseas.html
I definitely should've waited for this foreclosure gate to "develop." And the Magnetar thing was posted right here by me. I just have not been able to gage what a pack of hyenas have been unleashed on the banks (NY FED included). So much for grand policy.
Options write entry takes the sting out and still rank buy but not crazy about the over-seas expansion. But as it's JPM there'll be money to burn here before it hurts them. Winter is a good time for CoCo's.
_________________
Today is the Tomorrow you worried about Yesterday! |
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
|
| Posted: Wed Oct 13, 2010 7:37 am Post subject: |
|
|
Dreaded quarter is in.... and revenues are down. And profits are UP. Go figure. Credit keeps improving. I'll take my premium here and try again on another panic--which may be getting scarce. Citi now holds cash greater than market cap.
Superbanker Dimon talking 10000 new jobs in the pipeline.
http://www.cnbc.com/id/15840232?video=1614169942&play=1
_________________
Today is the Tomorrow you worried about Yesterday! |
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
|
| Posted: Fri Oct 08, 2010 12:52 pm Post subject: |
|
|
Today'll work just fine: selling ATM Oct puts and see if I can get long this yield-horse into an IRA.
I don't see the foreclosure moratorium as something that's going to last more than a quarter. It's good for the country, good for retail, good for M&A and is unlikely to see any serious class-action judgment. Any monies could be taken against the loan arrears.
I don't see a QE2--or further compression of spreads for these guys; but, even so, the appreciation of balance sheets should more than compensate for a couple of quarters.
_________________
Today is the Tomorrow you worried about Yesterday! |
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
|
| Posted: Thu Sep 30, 2010 9:17 am Post subject: |
|
|
Well that yield-curve engine is NOT set to power through in the middle curve--the FED has fixed that. But Yield is set to blossom: one more sell on JPM and I'll be selling puts and hopefully get in on that dividend. UBS says nothing foreseeable here but Jamie has all but committed. 7% is not a stretch. And then there's the (now mythical?) capital gain:
http://www.marketwatch.com/story/jp-morgan-chase-bears-should-worry-2010-09-30?siteid=rss&rss=1
_________________
Today is the Tomorrow you worried about Yesterday! |
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
|
| Posted: Wed Apr 14, 2010 7:38 am Post subject: |
|
|
An "embarrassment of riches" the article says:
http://detnews.com/article/20100413/AUTO01/4130408/1148/rss25
Fixed income. I keep going back to that curve....don't fight the FED.  The test will be if that other Morgan gets in on it.
I'm looking for this engine to power on through to early '11--with shocks in between of course. And at even 2% FF we're still at the best rates of our known recessions. Financials continue to be the 800lb gorilla in our "P/E" anxiety.
_________________
Today is the Tomorrow you worried about Yesterday! |
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
|
| Posted: Thu Apr 01, 2010 7:27 am Post subject: |
|
|
On his way out Dimon learns that no good deed goes unpunished:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aGCSnkmqtuts&pos=3
As if that would have made a difference. Really not much different than Lewis. The backlash was there already--just lookin' for a reason. You did the right thing, Jamie. Now enjoy your yacht while you wait for the Republicans to make you Treas. Secretary--not.
_________________
Today is the Tomorrow you worried about Yesterday! |
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
|
| Posted: Thu Feb 25, 2010 9:14 am Post subject: |
|
|
JPM is no warm and fuzzy feeling in its slide presentation for the investors meeting. Note that subprime is the new prime--nothing is obvious.
· Return on equity is being cut on IB, retail finance, card, and commercial banking.
· Card losses could hit 11%
· $1.4 bln loss from home equity. $600 mln from prime mortgage and $500 mln from sub prime
· Home lending portfolio to lose money the next 3-5 years ex reserve charges.
_________________
Today is the Tomorrow you worried about Yesterday! |
|
| Back to top |
|
|
Ven
Senior Poster
Joined: 30 Dec 2009
Posts: 115
|
| Posted: Fri Jan 15, 2010 11:54 am Post subject: |
|
|
Looks like JPM guilty of short sale fraud.
What lengths these banksters will go to...
http://www.cnbc.com/id/34877347/ |
|
| Back to top |
|
|
Ven
Senior Poster
Joined: 30 Dec 2009
Posts: 115
|
| Posted: Fri Jan 15, 2010 11:01 am Post subject: |
|
|
Looks like all their profit came from brokerage, again.
Big spike in consumer credit losses.
Does not bode well for most banks. |
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
|
| Posted: Fri Jan 15, 2010 10:06 am Post subject: |
|
|
_________________
Today is the Tomorrow you worried about Yesterday! |
|
| Back to top |
|
|
Please log in to view without the ad banners |
|
|
|
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum
|
|
FAQ
Search
Memberlist
Usergroups
Statistics
Register
Profile
Log in to check your private messages
Log in
