JPMorgan Takes Home-Equity Hit
JPMorgan Chase (JPM - Cramer's Take - Stockpickr) stumbled in early trading Wednesday after the banking giant posted better-than-expected second-quarter earnings but said profits were hit by troubles with home-equity loans.
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In the quarter, JPMorgan Chase made $4.2 billion, or $1.20 a share, up from $3.5 billion, or 99 cents share, in the year-earlier period. Revenue rose 25% to $18.9 billion.
Analysts were expecting the New York bank to earn $1.08 a share on $17.6 billion in revenue.
Revenue from JPMorgan Chase's investment bank rose 34% in the quarter to $5.8 billion. The jump reflected solid investment advisory fees, strong debt underwriting and "record" equity underwriting fees, the company said.
But JPMorgan Chase's retail financial-services business was another story.
While revenue from the unit rose 15% to $4.4 billion, its profit slid 10% to $785 million as the company sharply increased its provision for credit losses.
The provision for credit losses in the businesses jumped to $587 million from $292 in the first quarter and $100 million a year earlier.
The provision includes a $392 million increase in the allowance for loan losses related to home-equity loans. Home-equity net charge-offs more than tripled to $98 million in the quarter from $30 million a year earlier.
"The increase in provision reflects weak housing prices in select geographic areas and the resulting increase in estimated losses for high loan-to-value home equity loans, especially those originated through the wholesale channel," the company said. "Home equity underwriting standards were further tightened during the quarter, and pricing actions were implemented to reflect elevated risks in this segment."
The stock was down 70 cents, or 1.4%, to $49.22 in early trading.
"Our strong earnings benefited from solid performance in the investment bank, record results in asset management and treasury and securities services, and very strong results in private equity," said Jamie Dimon, its chairman and CEO. "In addition, during the quarter we strengthened our reserve for the home equity lending portfolio. Although we remain at a relatively benign point of the credit cycle, we continue to focus on being prepared for a less favorable environment. Given the diversity of our business mix, improving operating margins across our businesses and the strength of our balance sheet, the firm is well-positioned for the future."
By ; Laurie Kulikowski
Via : www.thestreet.com
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Zecco.com
TD AMERITRADE
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Charles Schwab
In the quarter, JPMorgan Chase made $4.2 billion, or $1.20 a share, up from $3.5 billion, or 99 cents share, in the year-earlier period. Revenue rose 25% to $18.9 billion.
Analysts were expecting the New York bank to earn $1.08 a share on $17.6 billion in revenue.
Revenue from JPMorgan Chase's investment bank rose 34% in the quarter to $5.8 billion. The jump reflected solid investment advisory fees, strong debt underwriting and "record" equity underwriting fees, the company said.
But JPMorgan Chase's retail financial-services business was another story.
While revenue from the unit rose 15% to $4.4 billion, its profit slid 10% to $785 million as the company sharply increased its provision for credit losses.
The provision for credit losses in the businesses jumped to $587 million from $292 in the first quarter and $100 million a year earlier.
The provision includes a $392 million increase in the allowance for loan losses related to home-equity loans. Home-equity net charge-offs more than tripled to $98 million in the quarter from $30 million a year earlier.
"The increase in provision reflects weak housing prices in select geographic areas and the resulting increase in estimated losses for high loan-to-value home equity loans, especially those originated through the wholesale channel," the company said. "Home equity underwriting standards were further tightened during the quarter, and pricing actions were implemented to reflect elevated risks in this segment."
The stock was down 70 cents, or 1.4%, to $49.22 in early trading.
"Our strong earnings benefited from solid performance in the investment bank, record results in asset management and treasury and securities services, and very strong results in private equity," said Jamie Dimon, its chairman and CEO. "In addition, during the quarter we strengthened our reserve for the home equity lending portfolio. Although we remain at a relatively benign point of the credit cycle, we continue to focus on being prepared for a less favorable environment. Given the diversity of our business mix, improving operating margins across our businesses and the strength of our balance sheet, the firm is well-positioned for the future."
By ; Laurie Kulikowski
Via : www.thestreet.com
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