Business NEWS

JPMorgan Chase Reports First-Quarter 2009 Net Income of $2.1 Billion

By Amarendra Bhushan for CEOWORLD Magazine Updated:April 16, 2009

JPMorgan Chase & Co. (NYSE: JPM) today reported first-quarter 2009 net income of $2.1 billion, compared with net income of $2.4 billion in the first quarter of 2008. Earnings per share were $0.40, compared with $0.67 in the first quarter of 2008.

Jamie Dimon, Chairman and Chief Executive Officer, commented: “The firm earned more than $2 billion this quarter, despite extremely high credit costs of $10 billion (including $4 billion added to reserves), largely in Card Services and Retail Financial Services. Importantly, we generated record firmwide revenue; record revenue and net income in the Investment Bank; and benefited from underlying growth in Retail Banking, including increased deposits and checking accounts, higher mortgage refinancing volumes and excellent progress on the Washington Mutual integration. We also continued to see solid volumes and earnings across Commercial Banking, Treasury & Securities Services and Asset Management.”

As of March 31, 2009, the firm reported a Tier 1 Capital ratio of 11.3%, or 9.2% excluding Troubled Asset Relief Program (“TARP”) capital from the government. Tangible common equity compared to risk-weighted assets was 7.2%, the allowance for credit losses was $28 billion and the firmwide loan loss coverage ratio stood at 4.53%. Dimon commented: “We remain focused on capital and balance sheet strength. These levels of capital and reserves, combined with our significant pre-provision earnings power, enable us to withstand an even worse economic scenario than we face today.”

Dimon further remarked: “We are maintaining our efforts to help the economy recover. We continue to lend and have extended approximately $150 billion in new credit to consumer and corporate customers during the first quarter. We made additional progress on our foreclosure prevention program, opening the remaining 22 of our 24 new Chase Homeownership Centers during the quarter, and continued working towards our goal of preventing 650,000 foreclosures by the end of next year to help keep people in their homes. Throughout this crisis, we have remained committed to doing our part to help bring stability to the communities in which we operate and to the financial system overall.”

Looking ahead to the rest of 2009, Dimon concluded: “It is reasonable to expect additional increases to credit reserves if the economic environment worsens. Yet, we are confident that even a highly adverse economic scenario would not compromise our overall strength and stability – or our ability to enhance our franchises. We remain well-positioned to benefit when the economy recovers and remain committed to serving our clients, investing in our franchise and building a stronger company for the future.”

Key Metrics and Business Updates:

* Generated record firmwide revenue of $26.9 billion and pretax, pre-provision profit of $13.5 billion (on a managed basis1):

* Record revenue and net income in the Investment Bank; #1 rankings for Global Debt, Equity and Equity-related volumes and Global Investment Banking Fees

*Solid growth in liability balances in Commercial Banking and Treasury & Securities Services

*Washington Mutual integration on track, driving Retail Banking growth in deposits by 62% and in checking accounts by 126%

* Net assets under management inflows of $119 billion over the past year in Asset Management

*Fortress balance sheet strengthened further:
o Tier 1 Capital of $137.2 billion, 11.3% Tier 1 Capital ratio (9.2% excluding TARP capital)
o $87.2 billion of tangible common equity1, 7.2% of risk-weighted assets

*Added $4.2 billion to credit reserves, bringing total to $28.0 billion, and firmwide loan loss coverage ratio to 4.53%2 as of March 31, 2009

*Continued lending and ongoing foreclosure prevention efforts:

* Extended approximately $150 billion in new credit to an estimated 4.5 million consumers (through credit cards, mortgages, auto and student loans), and to small and mid-sized businesses and large corporations

* Purchased nearly $34 billion of mortgage-backed and asset-backed securities

* Prevented almost 150,000 loan foreclosures since October 2008, bringing the total to over 400,000 since early 2007; opened the remaining 22 of our 24 new Chase Homeownership Centers and added over 650 loan counselors during the quarter

* Checking accounts totaled 25 million, up 126% from the prior year (primarily due to the Washington Mutual transaction) and up 2% from the prior quarter.

* Average total deposits grew to $345.8 billion, up 62% from the prior year (primarily due to the Washington Mutual transaction) and 2% from the prior quarter.

* Deposit margin was 2.85%, compared with 2.64% in prior year and 2.94% in the prior quarter.

* Average Business Banking and other loans were $18.4 billion, and originations were $462 million.

* Branch sales of credit cards increased 50% from the prior year and declined 12% from the prior quarter.

* Branch sales of investment products increased 8% from the prior year and 11% from the prior quarter.

* Overhead ratio (excluding amortization of core deposit intangibles) was 58%, compared with 58% in the prior year and 54% in the prior quarter.

* Number of branches grew to 5,186, up 65% from the prior year and down 5% from the prior quarter, primarily due to the consolidation of Washington Mutual branches.

* California regional activity included rebranding of 708 Washington Mutual branches and 1,900 ATMs, and opening of nine regional homeownership centers; national activity included consolidation of nearly 300 Washington Mutual branches.

Retail Banking reported net income of $863 million, up by $318 million, or 58%, from the prior year. Compared with the prior quarter, net income declined by $177 million, or 17%, due to decreased deposit-related fees, narrower margins on deposits, higher FDIC insurance premiums and an increase in the provision for credit losses.

Net revenue was $4.3 billion, up by $1.8 billion, or 73%, from the prior year, reflecting the impact of the Washington Mutual transaction, wider deposit spreads and higher deposit-related fees.

The provision for credit losses was $325 million, compared with $49 million in the prior year, due to an increase in the allowance for loan losses for Business Banking loans, reflecting a weakening credit environment.

Noninterest expense was $2.6 billion, up by $1.0 billion, or 65%, from the prior year, due to the impact of the Washington Mutual transaction and higher FDIC insurance premiums.

Consumer Lending reported a net loss of $389 million, compared with a net loss of $856 million in the prior year. Compared with the prior quarter, the current quarter net loss of $389 million improved by $27 million, reflecting wider loan spreads and higher mortgage production revenue predominantly offset by a decline in MSR risk management results, an increase in the provision for credit losses and higher servicing expense.

Net revenue was $4.5 billion, nearly double the $2.3 billion recorded in the prior year, driven by the impact of the Washington Mutual transaction, higher mortgage fees and related income, and wider loan spreads. The increase in mortgage fees and related income was driven by higher net mortgage servicing revenue and higher mortgage production revenue. Mortgage production revenue was $481 million, up by $105 million, as wider margins on new originations were offset partially by an increase in reserves for the repurchase of previously-sold loans and lower mortgage origination volumes. Net mortgage servicing revenue (which includes loan servicing revenue, MSR risk management results and other changes in fair value) was $1.2 billion, an increase of $1.0 billion from the prior year. Loan servicing revenue was $1.2 billion, up by $629 million, reflecting 83% growth in third-party loans serviced. MSR risk management results were positive $1.0 billion, compared with negative $19 million in the prior year. Other changes in fair value of the MSR asset were negative $1.1 billion, compared with negative $425 million in the prior year.

Like this article! ‹ Suzlon Energy in talks to raise $80.5 mln with a Malaysia-based investor C Sivasankaran for its Germany REpower unit eBay To Buy Korean Auction Site Gmarket; Yahoo Helps Out ›
Share this Post: Get It Delivered To Your Inbox