Bonds Boost JPMorgan Chase's Asset Management Business

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JPMorgan Chase & Co.'s fourth-quarter earnings quadrupled as the New York-based banking company continued to see strong growth from its asset management business.

The company reported Friday its assets under management rose 10% to $1.2 trillion and assets under supervision rose 14% to $1.7 trillion. JPMorgan Chase attributed this growth to higher market levels and inflows into fixed income and equity products "offset partially by outflows in cash products." Custody, brokerage, administration and deposit balances rose $89 billion to $452 billion because of higher market levels on custody and brokerage balances, and brokerage inflows into the private bank.

Throughout the investment industry, fixed income products had a strong 2009 after a brutal 2008, according to Morningstar. Inflows predominated in 2009, with bond funds capturing the majority of new assets. Morningstar said that net inflows amounted to $377 billion for last year, and bond funds accounted for $357 billion of that total.

Net revenue from its asset management business rose 32% to $2.2 billion from a year earlier. Noninterest revenue increased 53% to $1.8 billion. The company said this growth was due to "higher valuations of seed capital investments, higher performance fees, the effect of higher market levels and higher placement fees."

Revenue generated by its private bank rose 15% to $723 million, but revenue from its private wealth management business remained flat at $331 million. Revenue from Bear Stearns Private Client Services rose 6% to $112 million.

Net income from JPMorgan Chase's asset management business rose 66% to $169 million from a year earlier. "These results reflected higher net revenue offset largely by higher noninterest expense and a higher provision for credit losses," the company said. Noninterest expense rose 21% to $257 million.

Overall, JPMorgan's share fell 1.66% to $43.95 by midday on Friday. Analysts said the shares declined because James Dimon, the company's chairman and chief executive officer, said during a conference call that the results "fell short of both an adequate return on capital and the firm's earnings potential."

The company, which was the first of the big banks to report fourth quarter results, posted a fourth-quarter profit of $3.28 billion, or 74 cents a share, up from $702 million, or 6 cents, a year earlier. Revenue rose 32% to $25.23 billion.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Financial Advisor Center

Referenced Stocks: JPM

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