Who's Afraid of the Big, Bad FinReg? ...Not JPMorgan (JPM)
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JPMorgan Chase & Co. (NYSE: JPM) said that new federal regulations on the financial system will not derail the firm’s recovery in earnings nor the possible future reinstitution of its normal dividend.
The firm said it has seen better-than-expected improvement in credit-card charge-offs so far during the third quarter, at around 8 percent. Comparable charge-offs in the previous quarter were 9.02 percent. JPMorgan said that the charge-offs will likely fall farther in the fourth quarter.
The bank said that home loan delinquencies were flat in July and August, suggesting that it will see no sequential improvement in the third quarter from the period ended in June. JPMorgan suggested that losses from home loans could increase if delinquency rates return to the levels seen in the second quarter of 2009.
“We view this statement positively as public volume numbers for capital markets have suggested a decline from the second quarter of 20-25 percent in many products through July and August, leaving a lot of volume to make up in the last two weeks of September,” Susquehanna analysts wrote on Wednesday. “Discussions with other active capital markets firms have suggested that their volume levels have generally declined in line with public indicators.”
Dimon indicated that the moving of standardized swaps to clearinghouses could cost the firm $1 billion in annual revenue -- the first time that JPMorgan has put a price tag on the potential impact of moving standardized and liquid swaps.
“Dimon noted, and we would agree, that history shows that reduced trading costs in other asset classes have generally driven higher volumes,” Susquehanna analysts wrote. “And for the dealers, there are likely to be additional positive offsets in the form of reduced capital requirements.”
Susquehanna maintains a Positive rating and $60 price target on JPM shares.
Shares of JPMorgan are up 35 cents to $41.07 today.
The firm said it has seen better-than-expected improvement in credit-card charge-offs so far during the third quarter, at around 8 percent. Comparable charge-offs in the previous quarter were 9.02 percent. JPMorgan said that the charge-offs will likely fall farther in the fourth quarter.
The bank said that home loan delinquencies were flat in July and August, suggesting that it will see no sequential improvement in the third quarter from the period ended in June. JPMorgan suggested that losses from home loans could increase if delinquency rates return to the levels seen in the second quarter of 2009.
“We view this statement positively as public volume numbers for capital markets have suggested a decline from the second quarter of 20-25 percent in many products through July and August, leaving a lot of volume to make up in the last two weeks of September,” Susquehanna analysts wrote on Wednesday. “Discussions with other active capital markets firms have suggested that their volume levels have generally declined in line with public indicators.”
Dimon indicated that the moving of standardized swaps to clearinghouses could cost the firm $1 billion in annual revenue -- the first time that JPMorgan has put a price tag on the potential impact of moving standardized and liquid swaps.
“Dimon noted, and we would agree, that history shows that reduced trading costs in other asset classes have generally driven higher volumes,” Susquehanna analysts wrote. “And for the dealers, there are likely to be additional positive offsets in the form of reduced capital requirements.”
Susquehanna maintains a Positive rating and $60 price target on JPM shares.
Shares of JPMorgan are up 35 cents to $41.07 today.
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