JPMorgan Chase Earns 90 Cents Per Share

Disappointing, but it could have been much worse. The New York Times reports:

The fourth-quarter slump was owed in part to declining revenue and a slowdown in JPMorgan’s sprawling investment bank, which suffered from the sluggish economic recovery in the United States and concerns that the European debt crisis will sweep across the continent.

The investment bank booked a $567 million accounting loss in the fourth quarter tied to the perceived riskiness of its own debt, reversing a one-time gain from last quarter that propped up earnings across Wall Street. In all, the unit’s profits sank 52 percent to $726 million in the fourth quarter.

Shares of JPMorgan were down more than 3 percent, to about 35.55, in morning trading.

Despite the turmoil in the fourth quarter, Jamie Dimon, JPMorgan’s chairman and chief executive, highlighted the firm’s gradual progress since the financial crisis. He also sounded a note of cautious optimism about the broader economic recovery.

“We have a mild recovery that might actually be strengthening,” Mr. Dimon said in a conference all with reporters, adding that the comeback appears to be “broad.”

The bank’s earnings report comes a day after Mr. Dimon announced the second major shuffling of his management team in a year. Jay Mandelbaum, head of strategy and business development, will leave the bank. And Barry Zubrow, JPMorgan’s risk management chief who guided the bank through the financial crisis, will now head corporate regulatory affairs, among other changes.

With the steady growth in profits last year, JPMorgan has emerged from the crisis as one of Wall Street’s most dominant firms. In 2011, JPMorgan stripped Bank of America of its title as the nation’s biggest bank by assets. Bank of America is still struggling to shed the legacy of the subprime mortgage mess.

Investment banking isn’t stable so it wouldn’t be unusual to see that business, along with trading, come roaring back in the future. This really doesn’t tell us about the underlying strength of the bank.

Jamie Dimon said that the Q4 results were “modestly disappointing.” I think that’s right. I still like JPM and the stock has a very good valuation. Watch for a dividend increase.

Posted by on January 13th, 2012 at 10:17 am


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