JP Morgan Beats Estimates With Loan Reserve Reduction
JP Morgan (NYSE: JPM) beat analyst estimates when it reported a lower drop in net income than consensus had estimated for its first quarter of 2012.
JP Morgan reported revenues of $27.4 billion, a 24 percent sequential quarterly improvement and up 6% over the first quarter last year. Revenues were also up 11 percent on consensus estimates. Although performance was seen across most businesses, investment banking and mortgage banking were particularly strengthened in the quarter. The company's Investment Bank operations maintained their number 1 ranking for global fees year-to-date. It registered a 68 percent sequential improvement in quarterly revenue, although it was down 11 percent from the year-ago comparable quarter. Retail financing contributed a 20 percent sequential improvement and 40 percent improvement from a year ago.
Net income of $5.4 billion was up 44 percent from the fourth quarter, but down 3 percent from the first quarter in 2011. 15 percent higher non-interest expense and a 38 percent less funds released from the credit loss provision reserves contributed to the drop in net income compared to the YoY period. On a per-share basis, net income was $1.28 per share.
The company pointed out that $0.28 of net income was due to reduction in loan loss reserves. That may disappoint investors who may have been looking for more solid signs of bona-fide increased growth.
JPM is considered a bellwether for the rest of the banking industry. Thus, a better than expected report may support other names in the space as they report.
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