JPM Q2 Earnings Summary

Tyler Durden's picture

Key highlights from the just released JPM results:

  • JPMorgan 2Q adj. EPS $1.27 vs est. $1.21; rev. $26.78b vs est. $24.91b
  • CEO Jamie Dimon sees card losses improving next quarter, sees mortgage taking some time to resolve issues, possible we will incur additional costs along the way
  • 2Q reserves $29.1b, release of $1.3b vs release of $2.6b in 1Q, coverage ratio 3.83% vs. 4.1% in 1Q
  • I-banking: rev. $7.31b, down 11% Q/q, up 16% Y/y
  • Fixed inc/equity mkt rev. $5.5b, down 16.7% Q/q, up 19.6% Y/y
  • I-banking fees $1.9b, up 37% Y/y
  • Hired more than 10,000 employees year-to-date

The one issue that everyone is concerned about - mortgage exposure:

“With respect to our mortgage portfolio, delinquency and net charge-off trends improved modestly compared with the prior quarter; however, net charge-offs remained high, and we expect credit losses to remain elevated. We have been working hard to fix our problems and address past mistakes. We have already incurred significant costs, charged-off substantial amounts and established significant reserves for mortgage-related issues. Unfortunately, it will take some time to resolve these issues and it is possible we will incur additional costs along the way. However, in time, these costs will normalize as well.”

On Investment Banking and recent trends in sales and trading:

Net revenue was $7.3 billion, compared with $6.3 billion in the prior year. Investment banking fees were up 37% to $1.9 billion, consisting of debt underwriting fees of $866 million (up 24%), equity underwriting fees of $455 million (up 29%), and advisory fees of $601 million (up 69%). Fixed Income and Equity Markets revenue was $5.5 billion, compared with $4.6 billion in the prior year, reflecting solid client revenue. Credit Portfolio revenue was a loss of $111 million, primarily reflecting the negative net impact of credit-related valuation adjustments, largely offset by net interest income and fees on retained loans.

As to why Jamie is God's new servant...

“Through the recession, we have helped hospitals, school systems, banks, state governments, countries and central banks, and we will continue to do so. During the first six months of 2011, JPMorgan Chase provided credit to and raised capital of over $990 billion for our clients. We originated mortgages to more than 360,000 people; we provided credit cards to approximately 4.6 million people; we lent or increased credit to more than 16,800 small businesses; we lent to more than 800 not-for-profit and government entities, including states, municipalities, hospitals and universities; we extended or increased loan limits to approximately 3,000 middle-market companies; and we lent to or raised capital for more than 5,000 other corporations. We are the #1 Small Business Administration lender in the U.S., with more loans made than any other lender. In 2009 and 2010, we lent more than $7 billion and $10 billion, respectively, to small businesses, and we have committed to lend at least $12 billion more this year. We remain committed to helping homeowners and preventing foreclosures. Since the beginning of 2009, we have offered 1,177,000 trial modifications to struggling homeowners.”

Full presentation supplement:

JPM Q2 Financial Presentation

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ZeroPower's picture

Wierd, no mention in there of their "uber silver short tied to derivatives that exponentially fail at silver>$36/oz".

Captain Benny's picture

Mark to unicorn is a pretty magical accounting standard.  We all know that the silver shorts are on somebody's books, even if that somebody won't come out and reveal it.

malikai's picture

What difference does it make? It's not like it is their money at stake. I hope it all does blow up, and they get a $1,000,000,000,000,000,000,000,000,000,000,000,000 bailout. It's a small price to pay for divine interthiefdom.

ZeroPower's picture

Probably the b.o.d of the COMEX, worth a shot looking over there.

Fact of the matter is, JPM makes as much $$ going long at the right time as they do going short at the right time. $45s was clearly the right time for the latter... lets see what happens now for the former part of that.

slaughterer's picture

From Reuters today, JPM has insignificant VaR for commodities.  They are fully hedged, it seems.  Sorry, but this "JPM has a massive silver short" rumor is false.

"JPMorgan's value-at-Risk (VaR) for commodities stood at $16 million in the second quarter, compared with $13 million in the first quarter and $20 million a year ago, the U.S. investment bank said in its earnings report on Thursday."

snowball777's picture

Sure all commodities are exactly the same...and oranges and apples and bananas are too.


ZeroPower's picture

Unfortunately, VaR is a bad joke. Even some newer concepts like expected shortfall or Conditional VaR are still just as flawed.

You mentioned a 16MM number up above. Thats great, probably with a 95% or even 99% of that not happening.

But hey, that other 1 or 5 % (depending on the sensitivity) shows absolutely nothing about how much in fact is possible at being lost, since its outside the sensitivity.

Theres tons of research done on how VaR, sucks. A shame its still used in practice by Risk Heads.

fuu's picture

A) We trust corporate reporting now?

B) We trust corporate accounting now?


Damn where was I when that memo went out?

digitlman's picture

10,000 people hired to fuck up the lives of the other 330 million.

gimli's picture

No ..... Jamie's vision is to eventually hire every American -- JPM is currently connecting the emergency sprinklers in their buildings to public gas lines. Don't worry --- he has a plan.......... 

augie's picture

Get fucked Jamie, you meretricious crotch pheasant. 

Captain Benny's picture

I guess its okay if CSCO drops 10k employees that actually do work from their pay so that a junk bank can hire 10k people to add no value or contribution to society.  Perhaps I should say they are hired to extract value from society.  Banking at its best.  To all those JPM employees that read this:  Are you blind to see the hazard created by your participation in the cartel?  What drives you to work at the Morque?

HowardBeale's picture

10,000 new criminals at work? Astounding! This is clearly a blow-off top in financial crime.

papaswamp's picture

Making money from money. Or how to complete fool the world via peices of paper based on nothing. It's good to be the emperor.

Josh Randall's picture

Hired 10k people ? Boy, China, India and the other BRICS must still be booming then, because he sure as hell didn't hire them in the US. Unless adding people to SNAP is considered adding headcount

bania's picture

i think cisco just let off 10,000 employees. we're moving people away from building communications infrastructure and into much more productive paper shuffling activities. end sarc.

malikai's picture

Rent seeking != paper shuffling. And, by the way, the Morgue also needs network people. How else are they going to get that <1ms HFT advantage?

BeerWhisperer's picture

This should put the DOW at 15,000 today...

chump666's picture

yawn...on the BS.  must be some weird borrowing/swap going with the Fed or something...we don't know about.  keep the retirees happy portfolio going

chump666's picture

and too think that the hedge funds that should do better are mostly neg...


A Man without Qualities's picture

It's the $80 bn plus of home equity loans (c. 50% of market cap) that you want to worry about.  We cannot resolve the mortgage crisis until we are honest about the problem, but when the banks have such large second lien exposures, they cannot afford to be honest..

swissinv's picture

were there any trading lossed for Q2?

trampstamp's picture

Sure futures rose because of JPM earnings. It's more like option spreaders goosing the indices to make a butt load of money off of people this Friday expiration. Buy out of the puts/calls on high beta stocks that report earnings this week. GOOG comes to mind.

snowball777's picture

Hired more than 10,000 employees year-to-date

In the US?

Esso's picture

 rev. $26.78b

Not too shabby. That's about $108 from each & every US citizen. They must really produce a fine product. So what is it?

BeerWhisperer's picture

Loans that will yield higher risk reserves then what they have to cover them.

slaughterer's picture

I never thought I would see the day when

JPM = good bank

GS = bad bank

Sean7k's picture

And your derivative exposure is how much? And your reserves as a percentage of that exposure are how much? 

JPM and Rockefeller are the banking system. They are agents of the owners of the FED. Support of the FED makes us all complicit in the transfer of wealth from the US to the Elites. Every dollar you consume or produce is another link in the chain of debt slavery.

What can we do? Stop making links and start making alternative financial systems...

Johnny Lawrence's picture

Where is their prop desk trading factored into all this?  None of these banks lose money trading anymore.

firstdivision's picture

I would guesstimate that of the 10K jobs, about 7k are part-time bank teller jobs (minimum wage ftw) and 3K were good paying, but were recently laid off (JPM laid off a a fair amount of their retail side FI/Equity traders/analysts).  And voila! You now can say you're helping the phlebs get jobs.

WoodMizer's picture

Max Keiser supports ZH, but I keep reading posts that suggest he is a shill.

If Keiser is a paid mouthpiece, who/whom is he shilling for?

I like the simplicity of his GIABO movement, but some of his socalist rhetoric concerns me.

I am new to Max an I want to know why many ZH members seem to have a negative view of him.

I am not trolling for an argument; I just want to know if he is dangerous.

firstdivision's picture

Everybody is dangerous to blindly follow.

WoodMizer's picture

I wasn't planning on following anybody, I am thinking of supporting him as a layman's source for the "Cliff's notes" version current econ events.  I find him caustic, but he is soothing compared to msm econ coverage.

I am more concerned that he might have a connection to the dark side, aka tea party/ Koch bros. 

augie's picture

TPTB spread disinformation as well man, if your experience with Max has been fruitful, why would you believe another person over yourself? I think of all the conspiracy theories out there, roughly 90% of them are all government generated to destroy the credibility of the 10% that are true. I could be wrong, but I think this applies to the real world as well. 

firstdivision's picture

Everybody is dangerous to blindly follow.

Josh Randall's picture

Mad Max is solid! I don't agree with his AGW stuff but he's obviously smart and passionate and shining a spotlight on murky corners of the financial world people don't get a chance to see or would even know about it if it wasn't for him