JPMorgan Chase misses by $0.12, misses on revs (57.40 )
Reports Q1 (Mar) earnings of $1.28 per share, excluding non-recurring items, $0.12 worse than the Capital IQ Consensus Estimate of $1.40; revenues fell 8.5% year/year to $22.99 bln vs the $24.04 bln consensus. Net income was $5.3 billion, down $1.3 billion from the prior year. The decrease was driven by lower net revenue and higher provision for credit losses, partially offset by lower noninterest expense.
- Net revenue was $23.9 billion, down $2.0 billion, or 8%, compared with the prior year. Noninterest revenue was $13.0 billion, down $1.8 billion, or 12%, compared with the prior year.
- Net interest income was $10.9 billion, down $202 million, or 2%, compared with the prior year, reflecting the impact of lower loan yields and lower trading and investment securities balances, predominantly offset by higher investment securities yields, lower long term debt and deposit interest expense.
- JPM reiterates it will increase its Q2 common stock dividend from the current $0.38 per share to $0.40 per share; the Firm repurchased $0.4 billion of common equity in the first quarter and is authorized to repurchase $6.5 billion of common equity through the first quarter of 2015.
- Fortress balance sheet
- Maintained Basel III Tier 1 common of $156 billion, or 9.5%
- High Quality Liquid Assets ("HQLA") of $538 billion
- Firm Supplementary Leverage Ratio ("SLR") of 5.1% including the impact of the U.S. NPR announced this week.
- The Firm's return on tangible common equity for the first quarter of 2014 was 13%, compared with 17% in the prior year.
- Net income was $1.9 billion, a decrease of $650 million, or 25%, compared with the prior year, due to lower net revenue and higher provision for credit losses, partially offset by lower noninterest expense. Net revenue was $10.5 billion, a decrease of $1.2 billion, or 10%, compared with the prior year. Net interest income was $7.0 billion, down $183 million, or 3%, driven by spread compression in Credit Card, Auto and Consumer & Business Banking, and by lower mortgage warehouse balances, largely offset by higher deposit balances. Noninterest revenue was $3.4 billion, a decrease of $972 million, or 22%, driven by lower mortgage fees and related income. The provision for credit losses was $816 million, compared with $549 million in the prior year and $72 million in the prior quarter.
- Mortgage originations were $17.0 billion, down 68% from the prior year and 27% from the prior quarter. Mortgage Banking net income was $114 million, a decrease of $559 million from the prior year, driven by lower net revenue and lower benefit from the provision for credit losses, partially offset by lower noninterest expense. Net revenue was $1.6 billion, a decrease of $1.1 billion compared with the prior year.
- Mortgage Servicing pretax loss was $270 million, compared with a pretax loss of $101 million in the prior year, reflecting a higher MSR risk management loss, largely offset by lower expenses.
- Card, Merchant Services & Auto net income was $1.1 billion, a decrease of $190 million, or 15%, compared with the prior year, driven by lower net revenue and higher provision for credit losses. Net revenue was $4.5 billion, down $209 million, or 4%, compared with the prior year. Net interest income was $3.3 billion, down $202 million compared with the prior year, predominantly driven by spread compression in Credit Card and Auto.
- Net income was $2.0 billion, down 24% compared with $2.6 billion in the prior year. These results primarily reflected lower revenue, partially offset by lower noninterest expense. Net revenue was $8.6 billion, down 15% compared with $10.1 billion in the prior year. Excluding the impact of a debit valuation adjustment ("DVA") gain of $126 million in the prior year, net revenue was down 14% from $10.0 billion in the prior year, and net income was down 22% from $2.5 billion in the prior year.
- Banking revenue was $2.7 billion, down 8% from the prior year.
- Investment banking fees were $1.4 billion, up 1% from the prior year. The increase was driven by higher advisory fees of $383 million, up 50% from the prior year on strong wallet share of completed transactions, as well as higher equity underwriting fees of $353 million, up 29% from the prior year on higher industry-wide wallet levels. These were partially offset by lower debt underwriting fees of $708 million, down 22% from the prior year reflecting lower industry-wide volumes of high-yield bond underwriting and loan syndications.
- Treasury Services revenue was $1.0 billion, down 3% compared with the prior year driven by lower trade finance revenue as well as the impact of business simplification initiatives.
- Lending revenue was $284 million, a decline from $498 million in the prior year primarily due to lower gains on securities received from restructured loans.
- Markets & Investor Services revenue was $5.9 billion, down 18% from the prior year.
- Fixed Income Markets revenue of $3.8 billion was down 21% from the prior year on weaker performance across most products and lower levels of client activity compared to a stronger prior year. Equity Markets revenue of $1.3 billion was down 3% compared with the prior year, on lower derivatives revenue. Securities Services revenue was $1.0 billion, up 4% from the prior year primarily driven by higher net interest income on higher deposits and higher asset-based custody fees. Credit Adjustments & Other revenue was a loss of $197 million driven by losses on net credit valuation adjustments ("CVA") as well as losses, net of hedges, related to funding valuation adjustments/DVA; prior year revenue was a gain of $99 million, mainly driven by DVA. Return on equity was 13% on $61.0 billion of average allocated capital.
- Net income was $578 million, a decrease of $18 million, or 3%, compared with the prior year, reflecting an increase in noninterest expense and lower net revenue, partially offset by a lower provision for credit losses. Net revenue was $1.7 billion, a decrease of $22 million, or 1%, compared with the prior year.
- Net income was $441 million, a decrease of $46 million, or 9%, from the prior year, reflecting higher noninterest expense, largely offset by higher net revenue. Net revenue was $2.8 billion, an increase of $125 million, or 5%, from the prior year.
- Book Value per Share $54.05 compared to $53.25 in Q4.
- Tier 1 Capital ratio 12.1%, Q4 11.9%;
- Total Loans $730 bln compared to $738 bln in Q4;
- Loan to deposit ratio 57% compared to 57% in Q4.