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JPMorgan Chase & Co. (JPM) Tops Q2 EPS by 26c

July 15, 2014 7:05 AM EDT

JPMorgan Chase & Co. (NYSE: JPM) reported Q2 EPS of $1.59, ex-items, $0.26 better than the analyst estimate of $1.33. Revenue for the quarter came in at $25.3 billion versus the consensus estimate of $23.86 billion.

The Firm’s return on tangible common equity for the second quarter of 2014 was 14%, compared with 17% in the prior year. Core loans increased by 8% compared with the prior year. The Firm repurchased $1.5 billion of common equity in the second quarter.

Jamie Dimon, Chairman and Chief Executive Officer, commented on the financial results: “Despite continued industry-wide headwinds in Markets and Mortgage, the firm has continued to deliver strong underlying performance. Consumer & Community Banking deposit growth and card sales volume both outpaced the industry2, and we had record loan originations in Business Banking. The Corporate & Investment Bank saw strong performance in fees with #1 position in Global IB fees YTD, global debt and equity, global syndicated loans and global long-term debt. Commercial Banking clients generated record investment banking revenues in the first half of the year. Asset Management had excellent performance across all measures.”

Dimon continued: “Toward the end of the second quarter, we saw encouraging signs across our businesses including an uptick in wholesale utilization, strengthening pipelines in our commercial and business banking segments, and some improvements in markets activity. While it is too early to assume that this momentum will continue, we have confidence in the long-term growth of the economy.

“Consumers, middle market companies and corporations are in increasingly good financial shape and the labor market is showing steady improvement. JPMorgan Chase provided credit and raised capital of over $1.0 trillion for our clients during the first half of 2014, which included $10 billion for U.S. small businesses.”

Dimon concluded: “This quarter marked the 10-year anniversary of JPMorgan Chase and Bank One coming together - the company overcame significant challenges and achieved extraordinary things during this time. Each of our businesses is among the best in the world, with increased market share, strong earnings performance and power, and an unwavering focus on serving our clients, communities and shareholders with distinction and dedication. We continue our progress on adapting to the new global financial architecture and on our control agenda. My pride in the company is greater than ever.”

Highlights:

  • Consumer & Community Banking: average Consumer & Business Banking deposits up 9%; credit card sales volume1 up 12%; record client investment assets up 19%; record Business Banking loan originations up 46%
  • Corporate & Investment Bank: maintained #1 ranking for Global Investment Banking fees with 8.2% wallet share YTD; assets under custody up 14%
  • Commercial Banking: period-end loan balances up 9%, driven by 14% growth in Commercial Real Estate; gross investment banking revenue with Commercial Banking clients up 25%
  • Asset Management: twenty-first consecutive quarter of positive net long-term client flows; record client assets up 15%; record loan balances up 17%

For earnings history and earnings-related data on JPMorgan Chase & Co. (JPM) click here.

JPMORGAN CHASE & CO.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(in millions, except per share, ratio and headcount data)
QUARTERLY TRENDS
SIX MONTHS ENDED JUNE 30,
2Q14 Change
2014 Change
SELECTED INCOME STATEMENT DATA
2Q14
1Q14
2Q13
1Q14
2Q13
2014
2013
2013
Reported Basis
Total net revenue
$
24,454
$
22,993
$
25,211
6
%
(3
)
%
$
47,447
$
50,333
(6
)
%
Total noninterest expense
15,431
14,636
15,866
5
(3
)
30,067
31,289
(4
)
Pre-provision profit
9,023
8,357
9,345
8
(3
)
17,380
19,044
(9
)
Provision for credit losses
692
850
47
(19
)
NM
1,542
664
132
NET INCOME
5,985
5,274
6,496
13
(8
)
11,259
13,025
(14
)
Managed Basis (a)
Total net revenue
25,349
23,863
25,958
6
(2
)
49,212
51,806
(5
)
Total noninterest expense
15,431
14,636
15,866
5
(3
)
30,067
31,289
(4
)
Pre-provision profit
9,918
9,227
10,092
7
(2
)
19,145
20,517
(7
)
Provision for credit losses
692
850
47
(19
)
NM
1,542
664
132
NET INCOME
5,985
5,274
6,496
13
(8
)
11,259
13,025
(14
)
PER COMMON SHARE DATA
Net income: Basic
1.47
1.29
1.61
14
(9
)
2.77
3.22
(14
)
Diluted
1.46
1.28
1.60
14
(9
)
2.74
3.19
(14
)
Cash dividends declared
0.40
(h)
0.38
0.38
5
5
0.78
(h)
0.68
(h)
15
Book value
55.53
54.05
52.48
3
6
55.53
52.48
6
Tangible book value (b)
43.17
41.73
39.97
3
8
43.17
39.97
8
Closing share price (c)
57.62
60.71
52.79
(5
)
9
57.62
52.79
9
Market capitalization
216,725
229,770
198,966
(6
)
9
216,725
198,966
9
COMMON SHARES OUTSTANDING
Average: Basic
3,780.6
3,787.2
3,782.4
3,783.9
3,800.3
Diluted
3,812.5
3,823.6
3,814.3
3,818.1
3,830.6
Common shares at period-end
3,761.3
3,784.7
3,769.0
(1
)
3,761.3
3,769.0
FINANCIAL RATIOS (d)
Return on common equity ("ROE")
11
%
10
%
13
%
11
%
13
%
Return on tangible common equity ("ROTCE") (b)
14
13
17
14
17
Return on assets
0.99
0.89
1.09
0.94
1.11
CAPITAL RATIOS (e)
Common Equity Tier 1 (“CET1”) capital ratio
9.8
(i)
10.9
10.4
9.8
(i)
10.4
Tier 1 capital ratio
11.1
(i)
12.1
11.6
11.1
(i)
11.6
Total capital ratio
12.4
(i)
14.5
14.1
12.4
(i)
14.1
95% CONFIDENCE LEVEL- TOTAL VaR (f)
Average VaR
$
55
$
42
$
45
31
22
$
49
$
59
(17
)
SELECTED BALANCE SHEET DATA (period-end)
Total assets
$
2,520,336
$
2,476,986
$
2,439,494
2
3
$
2,520,336
$
2,439,494
3
Loans:
Consumer, excluding credit card loans
289,178
288,168
288,096
289,178
288,096
Credit card loans
126,129
121,816
124,288
4
1
126,129
124,288
1
Wholesale loans
331,676
320,987
313,202
3
6
331,676
313,202
6
Total Loans
746,983
730,971
725,586
2
3
746,983
725,586
3
Deposits
1,319,751
1,282,705
1,202,950
3
10
1,319,751
1,202,950
10
Long-term debt (g)
269,929
274,512
266,212
(2
)
1
269,929
266,212
1
Common stockholders' equity
208,851
204,572
197,781
2
6
208,851
197,781
6
Total stockholders' equity
227,314
219,655
209,239
3
9
227,314
209,239
9
Loans-to-deposits ratio
57
%
57
%
60
%
57
%
60
%
Headcount
245,192
246,994
254,063
(1
)
(3
)
245,192
254,063
(3
)
LINE OF BUSINESS NET INCOME
Consumer & Community Banking
$
2,443
$
1,936
$
3,089
26
(21
)
$
4,379
$
5,675
(23
)
Corporate & Investment Bank
1,963
1,979
2,838
(1
)
(31
)
3,942
5,448
(28
)
Commercial Banking
658
578
621
14
6
1,236
1,217
2
Asset Management
552
441
500
25
10
993
987
1
Corporate/Private Equity
369
340
(552
)
9
NM
709
(302
)
NM
NET INCOME
$
5,985
$
5,274
$
6,496
13
(8
)
$
11,259
$
13,025
(14
)
(a)
For a further discussion of managed basis, see Note (a) on page 12.
(b)
Tangible book value per share and ROTCE are non-GAAP financial measures. Tangible book value per share represents tangible common equity divided by period-end common shares. ROTCE measures the Firm's annualized earnings as a percentage of tangible common equity. For further discussion of these measures, see page 35 of the Earnings Release Financial Supplement.
(c)
Share price shown is from the New York Stock Exchange. The common stock is also listed and traded on the London Stock Exchange and the Tokyo Stock Exchange.
(d)
Ratios are based upon annualized amounts.
(e)
Basel III Transitional rules became effective on January 1, 2014; all prior period data is based on Basel I rules. Beginning with the second quarter of 2014, the capital ratios represent the Collins Floor, as calculated under the Basel III Transitional rules. See footnote (a) on page 33 of the Earnings Release Financial Supplement for additional information on Basel III and the Collins Floor. Under Basel I CET1 represents Tier 1 common capital. Prior to Basel III becoming effective on January 1, 2014, Tier 1 common capital was a non-GAAP financial measure. For further discussion of Tier 1 common capital, see page 35 of the Earnings Release Financial Supplement.
(f)
The increase in average VaR during the three months ended June 30, 2014 was due to a change in the MSR hedge position in Mortgage Banking in advance of an anticipated update to certain MSR model assumptions. When such updates were implemented, VaR decreased to prior levels. The MSR model and assumptions are continuously evaluated and periodically updated to reflect recent market behavior. Mortgage Banking average VaR was $20 million, $5 million and $15 million for the three months ended June 30, 2014, March 31, 2014 and June 30, 2013, respectively, and $13 million and $17 million for the six months ended June 30, 2014 and June 30, 2013, respectively. For information regarding CIB VaR, see Corporate and Investment Bank on page 21 of the Earnings Release Financial Supplement.
(g)
Included unsecured long-term debt of $205.6 billion, $206.1 billion and $199.1 billion for the periods ended June 30, 2014, March 31, 2014 and June 30, 2013, respectively.
(h)
On May 20, 2014, the Board of Directors increased the quarterly common stock dividend from $0.38 to $0.40 per share. On May 21, 2013, the Board increased the quarterly common stock dividend from $0.30 to $0.38 per share.
(i)
Estimated.


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