Thursday, January 13, 2011

JPMorgan Chase & Co. (NYSE: JPM): Q4 Earnings Preview 2010

JPMorgan Chase Co. (NYSE: JPM), the second-biggest U.S. bank, is scheduled to release its fourth-quarter earnings before the opening bell on Friday, January 14, 2011. Analysts, on average, expect the company to report earnings of 99 cents per share on revenue of $24.54 billion. In the year ago period, the company reported earnings of 74 cents cents per share on revenue of $25.24 billion.

JPMorgan Chase & Co., a financial holding company, provides various financial services worldwide. JPMorgan Chase’s principal bank subsidiaries are JPMorgan Chase Bank, National Association (JPMorgan Chase Bank, N.A.), a national banking association with United States branches in 23 states, and Chase Bank USA, National Association (Chase Bank USA, N.A.), a national banking association that is the Firm’s credit card-issuing bank. It operates in six segments: Investment Bank, Commercial Banking, Treasury & Securities Services, Asset Management, Retail Financial Services, and Card Services.

In the preceding third quarter, the New York-based company's net income was $4.42 billion, or $1.01 a share, compared to $3.59 billion, or 82 cents a share, in the prior-year quarter. Revenue declined to $23.8 billion from $26.6 billion in the same quarter last year. Analysts, on average, expected the company to earn 90 cents a share on revenue of $24.3 billion. The provision for credit losses was $3.2 billion, down by $6.6 billion, or 67%, from the prior year. Tier 1 Capital ratios were 11.9% at September 30, 2010 (estimated), 12.1% at June 30, 2010, and 10.2% at September 30, 2009. Tier 1 Common ratios were 9.5% at September 30, 2010 (estimated), 9.6% at June 30, 2010, and 8.2% at September 30, 2009. 

At its last earnings call in October, the company said that it expects mortgage credit losses to remain at high levels for the next several quarters. Mortgage credit losses could trend higher if economic conditions worsen. The company also expects credit card net charge-offs to continue to improve next quarter. 

JP Morgan will likely have a better fourth quarter than the previous two periods, driven by equity underwriting and higher volume in stock and bond trading.

The financial giant's plans to maintain its prime spot are concentrated on international growth. The bank wants to expand overseas and better link its commercial bank and payments businesses to the securities unit in order to sell more services to multinationals.

JPMorgan, like other banks, has been restricted by regulators from returning cash to its shareholders amid the financial crisis. It will submit a proposal to the Federal Reserve in January that should let the bank increase its dividend. According to Deutsche Bank analyst Matt O’Connor, JPMorgan could lift its annual dividend to 70 cents per share and buy back 10% of its outstanding shares next year.

In terms of stock performance, JP Morgan shares have gained nearly 2% over the past year.

Full Disclosure: None.
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