Daily Management Review

JP Morgan Presents Good First Quarter Results


JP Morgan Presents Good First Quarter Results
Setting aside fears of critics about the expectations of the bank about its quarterly performance, JP Morgan announced better-than-expected profits and revenue for the first quarter of the current fiscal. One of the largest banks of United States also managed to keep a tab on its operating expense that boosted the operating profits.
The expectations of shareholders were exceeded after the bank announced a 10% increase in the profits of firm’s investment bank even in the face of a 6% drop in revenues. The earnings of the consumer bank have also increased. With just a $14.2 billion bill for the quarterly operating expense, the bank has shown that it is proceeding on a path of continued progress and trimming of the operating expenses. Analysts had predicted the operating expenses to be around $14.7 billion quarterly expenses.
The target that the bank has set for its operational expenses in 2015 stands at $57 billion and the results, especially the decreasing operational expenses have raised hopes among the investors and shareholders that the bank would be able to attain the set target of trimming its operational expenses.
Analysts are of the view that the operational expenses figure would be critical for the leading bank to clock a 15% return on tangible common equity by the end of the fiscal year and a 55% overhead ratio. The results announced on Tuesday indicate that the bank is moving on the right path.
On Tuesday JP Morgan reported $1.54 in earnings per share for the first riding on a $6.3 billion in profits against a $25.4 billion generated revenue. The forecast by the analysts were pegged at $1.45 in EPS against revenue of $24.4 billion. On the year-on-year basis the profits of the bank rose by 5% while revenue fell by 3%.
Analysts had been expecting the investment bank wing of the bank to turn out a mixed quarter following a continued weakness in its fixed income trading division. But increased activities related to merger and acquisition and companies continued to increase corporate debt to finance new ventures and returns of capital to investors.
Proving the analysts right, the investment bank wing of JP Morgan noted a net revenue decrease of 6% to $8.7 billion and trading revenue decrease of 7% to $5.8 billion. A 4% increase in investment banking revenues were not enough to offset the set back in the investment banking final quarterly results.  
The consumer division of JP Morgan recorded a rise in profits even with a drop in revenue. Even while as revenues decreased by 4% to clock $11 billion for the quarter, the division made of profit of 1%.
The core loan segment performed well with an increase of 12% with the balance of loans and deposits rising appreciably in favour of loans advanced in most of the divisions.
The good quarterly results helped the bank stocks to trade at a near 1% higher $68.59 in pre-market trading on Tuesday.

(Source: http://www.forbes.com)