U.S. banking giant J.P. Morgan Chase (NYSE:
) reported first quarter earnings Friday that beat expectations
and shares fell in the pre-market.
Also, the company announced that it is boosting its dividend
in the second quarter, increasing its capital redistribution plan
For the first quarter of 2013, J.P. Morgan reported earnings
per share of $1.59 vs. the $1.39 estimate of analysts. Revenue
was slightly weaker than expected at $25.12 billion as compared
to forecasts of $25.94 billion. Also, the company announced a 27
percent increase in the dividend to $0.38 per share.
Diving into the many businesses of J.P. Morgan, the company
reported that consumer and community banking deposits rose 10
percent while mortgage originations were up 37 percent to $52.7
billion and credit card sales volume gained nine percent. The
investment banking division retained its number one global
ranking by fees and increased assets under custody by eight
percent to $19.3 trillion. The asset management division also saw
a sixteenth consecutive quarter of net inflows.
Alongside the dividend increase, the board of directors also
announced that the company had purchased $2.6 billion in stock in
the first quarter of 2013. Also, the board authorized an
additional $6 billion in buybacks through the first quarter of
CEO Jamie Dimon pointed out that the fortress balance sheet
became even stronger in the first quarter as the company's Basel
I Tier 1 Capital Ratio was 10.2 percent. Under the new Basel III
requirements, its capital ratio falls to 8.9 percent, which is
still an increase from the previous quarter's 8.7 percent. The
bank also has high quality liquid assets of $413 billion.
The bank did note that total earnings were boosted by a $650
million pre-tax benefit from reduced mortgage loan-loss reserves
and $500 million from reduced credit card loan-loss reserves. On
a per share basis, these one-time items represented a $0.18
after-tax benefit to shareholders.
Jamie Dimon, Chairman and Chief Executive Officer, commented
on the financial results: "JPMorgan Chase had a very good start
to the year. All our businesses had strong performance, and our
client franchises did exceptionally well. The Corporate &
Investment Bank was #1 in fees, global debt and equity,
syndicated loans, and announced M&A. Those leadership
positions reflect the volume of business we do with clients and
it is a great result."
"Consumer & Community Banking deposits were up 10%
compared with the prior year," he continued, "client investment
assets were up 15%, and mortgage loan originations were up 37%.
Asset Management also had strong performance with loan balances
up 27% compared with the prior year. Assets under supervision
were up 8% to $2.2 trillion. This business achieved a record $31
billion of net long-term client flows for the first quarter."
"We are seeing positive signs that the economy is healthy and
getting stronger. Housing prices continued to improve and new
home purchases are also starting to come back. We also saw strong
performance in our credit card portfolio, with net charge-offs
remaining near historic lows, another sign that consumers are
healthier and more confident. As a result, we reduced the
allowance for loan losses in Consumer & Community Banking in
the first quarter by a total of $1.2 billion and are likely to
see further releases. Credit conditions were also favorable
across the wholesale loan portfolios."
Dimon added: "The exception is that loan growth across the
industry has been softer this quarter, although year-on-year
growth remained strong. Small businesses remain cautious about
the recovery and fiscal uncertainty, and are not investing their
capital. However, companies' balance sheets are much stronger
than they were before the financial crisis and small businesses
remain well positioned to invest in growth once they decide to.
With approximately 2 million small business customers, Chase
remains the nation's #1 Small Business Administration lender and
we plan to serve more customers when loan demand comes back."
Dimon concluded: "We are very pleased with our first-quarter
results, are proud of our accomplishments and remain optimistic
about the future."
J.P. Morgan shares traded lower in the pre-market to $49.09
from Thursday's close of $49.31. Markets now eye further bank
earnings from Wells Fargo (NYSE:
), due out at 8:30 am eastern.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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