Saturday, July 21, 2012

JPMorgan Earnings Review: Not Too Bad!

JPMorgan reported QE June 2012 financial results on Friday, July 13

CEO Jamie Dimon and accomplices dodged the bullet and Q2 financial results keep them in the ballgame. Q1 financial results were revised resulting in a decrease in net income of -$459 million and a decrease in earnings per share of -$0.12. This is reflected in the data below.

Metric, QoQ Change, YoY Change
Total Assets: $2.29 trillion, -1%, +2%
Net Revenues: $22.18 billion, -15%, -17%
Net Income: $4.96 billion, +1%, -9%
Earnings per Share: $1.21, +2%, -5%

At QE 6-30-12, I have rated JPMorgan a "D" on a scale of A+ to G-. This is no change in the rating from the prior QE 3-31-12. The median rating is "D" and the average rating at QE 3-31-12 was "C". Financial position is weighted more than financial performance. The QE 3-31-12 bank ratings review is here.

Jamie Dimon, Chairman and Chief Executive Officer, commented on financial results: "Importantly, all of our client-driven businesses had solid performance. However, there were several significant items that affected the quarter's results - some positively; some negatively. These included $4.4 billion of losses on CIO's synthetic credit portfolio, $1.0 billion of securities gains in CIO and a $545 million gain on a Bear Stearns-related first-loss note, for which the Firm now expects full recovery. The Firm's results also included $755 million of DVA gains, reflecting adjustments for the widening of the Firm's credit spreads which, as we have consistently said, do not reflect the underlying operations of the Firm. The Firm also reduced loan loss reserves by $2.1 billion, mostly for the mortgage and credit card portfolios. These reductions in reserves are based on the same methodologies we have used in the past - the good news is that these reductions reflected meaningful improvements in delinquencies and estimated losses in these portfolios. We continue to maintain strong reserves."


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