JPM Report Highlights What Regulations Could Mean for Bank Earnings

   

JPMorgan Chase (JPM) said its earnings in the last quarter rose 57% to $3.3 billion for the earnings period ended in March. The number topped Wall Street estimates. They also showed how important trading and investment banks are to the big bank’s bottom line, and what government restrictions to proprietary trading might do to earnings.

The company stated, “The Firm’s net income of $3.3 billion reflected another strong quarter for the Investment Bank, particularly in Fixed Income Markets, and continued solid performance across Asset Management, Commercial Banking and Retail Banking. Unfortunately, these good results were partially offset by high losses in the consumer credit portfolios.”

Figures from Morgan’s investment bank were particularly strong. Net income was $2.5 billion, an increase of $865 million from the prior year. These results reflected strong net revenue, particularly in Fixed Income Markets, and a benefit from the provision for credit losses.

Retail Financial Services reported a net loss of $131 million, compared with net income of $474 million in the prior year. Net revenue was $7.8 billion, a decrease of $1.1 billion, or 12%, from the prior year. Net interest income was $5 billion, down by $214 million, or 4%, reflecting the impact of lower loan and deposit balances, partially offset by a shift to wider-spread deposit products. Noninterest revenue was $2.8 billion, down by $845 million, or 23%, driven by lower mortgage fees and related income.

Card Services reported a net loss of $303 million, compared with a net loss of $547 million in the prior year. The improved results were driven by the lower provision for credit losses, partially offset by lower net revenue.

Commercial banking net income was $390 million, an increase of $52 million, or 15%, from the prior year. The increase was driven by a decrease in the provision for credit losses, lower non-interest expense and higher net revenue.

Asset management net income was $392 million, an increase of $168 million, or 75%, from the prior year. These results reflected higher net revenue offset partially by higher noninterest expense.

Investment banking revenue and earnings were critical to JPM’s earnings success. The credit card and retail results would otherwise have swamped it.

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