JPMorgan's Q1 income falls 6.7% but beats estimates; stock jumps

JPMorgan's Q1 income falls 6.7% but beats estimates; stock jumps: "JPMorgan Chase (JPM), the nation’s largest bank by assets, said Wednesday its first quarter net income fell 6.7% from a year ago to $5.5 billion after it raised its loan loss reserves.

Earnings per share for the New York-based company totaled $1.35 vs. $1.26 estimated by the analysts who were polled by S&P Global Market Intelligence.

Revenue dipped 3% to $24.1 billion. It beat $22.9 billion estimated by the analysts.

The company's stock rose 3% in pre-market trading.

JPMorgan's results are key because they offer the first look at whether the concerns that have hammered bank stocks this year are justified. Industry executives have warned that falling oil prices, declining merger activities and global economic uncertainties are weighing on their businesses despite continued robustness in consumer banking.

"We delivered solid results this quarter with strong underlying drivers," said CEO Jamie Dimon in a statement. "The consumer businesses continue to grow loans and deposits impressively, attracting deposits faster than the industry. The U.S. consumer remains healthy and consumer credit trends are favorable.”

The sluggish environment in its investment banking and asset management businesses was attributed for the revenue decline. "The decline was largely
driven by lower fixed income markets revenue and investment banking fees, in both cases versus strong performance in the prior year
quarter," JPMorgan said.

Large banks, including JPMorgan, have raised their loan loss reserves for the first time in years in response to souring loans to troubled oil and gas companies, raising costs and worrying investors. And it showed in the latest results. Its provision for credit losses was raised from $959 million a year ago to $1.8 billion in the first quarter, cutting into its bottom line.

JPMorgan's consumer and community banking, its largest business unit, reported a 4% revenue gain to $11.1 billion due to higher deposit balances, deposit-related fees and debit card revenue. Net income rose 12% to $2.5 billion.

Mortgage banking revenue was 7% higher to $1.9 billion, fueled by growth in its loans. The business that issues credit cards and business and car loans reported $4.7 billion in revenue, up 2%, driven by higher auto lease, credit card sales volumes and higher loan balances.

Its corporate and investment banking unit, which handles mergers, acquisitions, corporate finance and other transactions, saw its revenue tumble 15% to $8.1 billion, Lower debt and equity underwriting fees were blamed but higher advisory fees helped offset the decline. Net income fell 22% to $2 billion.

The asset management unit, which manages money for clients, reported a 1% decline in revenue to $3 billion. Net income rose 17% to $587 million due to higher interest income and loan growth."



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