Friday, January 14, 2011

J.P. Morgan Chase (JPM) 4th quarter profit jumps 47%

J.P. Morgan Chase and Co. - JPM  (FusionIQ Rank 90 out of 100)

We have liked the banking sector now for several months as their FusionIQ ranks have improved markedly.  Today we see early improvement detected by FusionIQ coming to fruition as J.P. Morgan Chase & Co.'s (JPM) fourth-quarter profit jumped 47%.   The banking behemoth said asset quality improved and it said consumers and businesses were looking for more loans. However executives were quick to cite that improvements were only "modest" and that borrowers who are actually tapping their lines of credit remains low.

"What we see is fairly broad based strength across corporate, middle market, even small business," Chief Executive James Dimon said on a conference call with reporters. "We see the consumer is getting stronger."

Looking at the different business units, the retail financial services business segment turned a profit from a year earlier as revenue rose 11%, while investment banking income from the prior year was down; due to soaring costs. Still, revenue climbed 26% in the segment as advisory fees and underwriting fees rose. It was again the most profitable part of J.P. Morgan.  Compared to the third-quarter, both revenue and income were up on Wall Street, while income was down in the retail side.  The company also continued to benefit from sharply reduced loan-loss reserves. Credit-loss provisions were $3.04 billion, down from $8.9 billion a year earlier and $3.22 billion in the prior quarter. In its card services unit, the improvement in credit quality led to a surging profit, the most improved business for the bank. The unit, where the credit loss provision was slashed 84%, swung to a $1.3 billion profit, second only to the investment bank, from a loss of $306 million.

As a whole, J.P. Morgan reported a fourth-quarter profit of $4.83 billion, or $1.12 a share, up from $3.28 billion, or 74 cents a share, a year earlier. Revenue on a managed basis, which excludes the impact of credit-card securitizations and is on a tax-equivalent basis, increased 5.9% to $26.72 billion.

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