October 15, 2010 by staff
Bac, JPMorgan Chase & Company (NYSE: JPM) third quarter results amounted to 1.01 per share, substantially ahead of the Zacks consensus estimate of 91 cents. The results have also skyrocketed from 82 cents in earnings for the quarter a year earlier.
The figures were better than expected mainly supported by a slowdown in the provision for credit losses, which more than offset the pressure on trading income, income from investment banking and non-interest income. Strong mortgage production by retail financial services, card services more sales volume and strong net inflows in asset management have also been impressive during the quarter.
Quarter in detail
Net income attributable to common shareholders was to 4.4 billion, up 23% and from 3.6 billion in the quarter a year earlier. A significantly lower provision for credit losses led to first results. However, lower income and non-interest expenses were offsetting factors.
Managed net revenue for the quarter was $ 24.3 billion, down 15% and from 28.8 billion in the quarter last year. However, this compares favorably with the estimate of Zacks Consensus and 24.2 billion.
The management of non-interest income have been and 11.7 billion, down 16% from to 14.0 billion in the quarter a year earlier. The decrease reflects lower revenues from principal transactions because of weak sales performance. Net interest income and was $ 12.6 billion, down 15% and from 14.8 billion in the quarter last year. The decrease in net interest income was primarily attributable to JPMorgan loan balances.
Non-interest expenses for the quarter and were 14.4 billion, up 7% and from 13.5 billion in the quarter a year earlier. The increase was driven by higher costs of litigation.
Managed provision for credit losses decreased by 67% yoy and for 3.2 billion. Total consumer provision for credit losses and was 3.2 billion, down from 64% to 9.0 billion in the quarter last year. This reflects a lower provision for credit losses as a result of crime trends and a reduction in net radiation.
JPMorgan’s credit quality has shown improvement during the quarter decent. On September 30, 2010, nonperforming assets were and 17.7 billion, down from 18.2 billion and the prior quarter and $ 20.4 billion in the quarter a year earlier. Net charge-offs decreased by $ 4.9 billion $ 5.7 billion in the previous quarter and $ 8.1 billion in the quarter a year earlier. Consequently, the rate of radiation administered improved to 2.84% against 3.28% in the prior-quarter and 4.30% in the quarter last year.
Assessment of capital
JPMorgan has maintained a strong capital position with a Tier 1 common capital estimated by 9.5% as of September 30, 2010, against 9.6% on June 30, 2010 and 8.2% on September 30, 2009.
Book value per common share was 42.29 and as on September 30, 2010 compared to $ 40.99 on 30 June 2010 and 39.12 and the September 30, 2009.
JPMorgan is one of the major lenders have recently decided to halt their foreclosure paperwork rampant irregularities led to a poor assessment of the authenticity of the information provided in the mortgage documents. Other donors who have made similar decisions are General Motors Acceptance Corporation (GMAC) Mortgage LLC, a wholly owned subsidiary of Ally Financial, Bank of America Corp. (NYSE: BAC) and PNC Financial Services Group Inc. (NYSE: PNC). As a precautionary measure, lawmakers have asked several other donors to end their process as well.
Although concerns about the short-term impact of the law on financial reform and the suspension of home foreclosures due to defects of paper covered its share price in recent days, the stock was up 0.2% after the announcement of third quarter results.
While most large banks have had to absorb the shocks of extraordinary recession, JPMorgan maintained consistent profitability throughout the economic downturn. Despite the impact on the earning power of the law on financial reform and the recent continuous pressure on trading revenue, JPMorgan is expected to deliver on the basis of its prudent business model and strong fundamentals.
By JPMorgan are maintaining a Zacks # 3 Rank, which results in a short-term ‘hold’ recommendation. We have a long-term “neutral” recommendation on the stock.
Several major banks are to report next week, including Citigroup (NYSE: C) on October 18, and Bank of America and Goldman Sachs (NYSE: GS), both on October 19.
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