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JPM Misses Revenues And EPS Due To Another $1 Billion In Legal Costs
Looks like the Jefferies earnings harbinger were right, because with another quarter down, and here is another painful report by JPM, which just launched the Q4 earnings season for financials with a miss on both the top and bottom line, reporting $1.19 in EPS, well below the $1.32 consensus, and just barely above the lower estimate of $1.16. This was a decline from both the previous quarter (by 17 cents) and from a year ago (by 11 cents). Revenues missed as well, with JPM reporting $23.552 billion in top line, a decline of $560 million from a year ago ($1.6 billion lower than Q3), and below the $24.0 billion consensus. And while JPM's latest recurring, non-one time "one-time, non-recurring" charge came as a surprise to most (although how over $30 billion in legal charges can be considered one-time is beyond us), at the same time JPM once again resorted to the oldest trick in the book, taking the benefit of some $704 million in loan loss reserve releases, nearly offsetting the entire negative impact of the legal charge.
Of course, the reported revenue should not be confused with the GAAP revenue, which actually was $1 billion less at $22.5 billion, the lowest quarterly real revenue in over a year!
The miss happened despite JPM repurchasing another $1.5 billion in common stock, leaving $2 billion in buyback capacity for Q1 2015.
The weakness in earnings was widespread, and now that JPM's prop desk is dead and buried, and the bank has to make money the old fashioned way using NIM, the fact that Mortgage Banking Income dropped from both the prior quarter and Q4 2013 will hardly inspire much confidence in the firm. Still the result was better than some had expected - the reason: Total headcount down over 7,500 for the year.
And then there was investment banking, where net income tumbled $715 Million from Q3, to 4972 MM, as a result of a $1.2 billion plunge in the most important Fixed Income Markets revenue to just $2.533 BN, below the $2.64 billion consensus estimate, down $1.21BN from Q3, and down a whopping $748MM from Q4 2013. The good news, if any, is that Equity Markets, while also declining BY $147MM from the prior quarter, actually posted a modest gain of $222 MM from a year ago to $1.1 billion; still a far cry from what the firm normally generates in Fixed Income
Of note: after taking its VaR to what may be a historic low of $35 in Q3, JPM has slowly started increasing it, with Q4 VaR rising to $40, below the $42 a year ago.
And then there was the "old faithful" piggy bank of EPS boosting: loan loss reserve releases. Because even though JPM took the highest provision for credit losses in Q4 since Q1, which rose to $840 million, up from $757MM in Q3, and from $692 in Q2 on what supposedly was "improved portfolio credit quality", it also decided to ramp up its loan loss reserve release which jumped to $704 million in Q4, the highest artificial boost to earnings since 2013, when it took the benefit of $1.3 billion in loan loss reserve releases.
Altogether, another weak report by the bank that is slowly but surely taking a long, hard look at Goldman's suggestion that it may have more value broken up than in its current state. And if Jamie Dimon isn't, than his shareholders surely are.
Full earnings presentation (link) below: whatever you do, don't look for the Net Interest Margin slide (usually first in the Appendix as can be seen here) - after it hits a record low in Q3, JPM decided to just do away with its entirely!
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A few bad apples--Jamie Dimon
What are the odds of JPM rising today?
Bye bye Jamie
$1 Billion In Legal Costs
It's not cheap to run a legit business.....even more so if you're not legit.
Cheap cufflinks will only get you so far.
So in the crux of it all a pack of lawyers have teamed up with a pack of bankers to protect their graft industry from a pack of government investigators finally acting out because the crop of sheople is getting too thinned?
A pack of government investigators eager to get jobs from the banks and law firms.
The fines of course are just funny money. No one goes to jail. That is paramount.
Will Jamie Dimons bonus get chopped? A few million here or there perhaps. A mere bag of shells...
Crime pays.
Even Dick Bove said that banks like JPM should be treated the same as tobacco companies- they're going to LIVE in court forever with lawsuits as far as the eye can see. The "one time non-recurring legal costs" thing is wearing thin on everyone.
My heart, it bleeds.
GAAP, Non-GAAP, blah, blah ,blah....
The fraud continues. Good news is that Bloomberg surveillance mentions FED distortion and that we MAY be in a liquidity trap.
I'll keep making a killing with UVXY and ignore the rest of this crap.
Mediocre and fraud can go on a long time before collapse.
to the FAZmobile!
What is the "other income" ($645MM) in the "Corporate/Private Equity" segment ($547MM) on page 13? Huge turnaround the past few quarters. More than 100% of segment income and a very material proportion of total income. Worth digging IMHO. Tylers, do you know?
william he looks too good for a guy with throat cancer..lotta jokes about his ailment and fitting too.
Wonder if JPM was short oil in the opaque segment... Nothing like the ability to abuse asymmetric leverage and knowledge of positions as MM for everything.
I doubt any upper level exec missed a paycheck or a 2014 bonus despite the massive loss.
Well the "good" news is that for the "to big to fails" they have access to all the free taxpayer money they want. The D.C. cesspool has made sure of that.
So a billion really is chump change. These mother fuckers are going to blow the whole system up, count on it!
FUBAR
the other good news is that they still have $14B in loan loss reserves to loot
Credit quality in residential finance is improving, in aggregate. Home prices up slighly with households continuing to deleverage. Both factors lead to (in theory) lower expected credit losses on loans (assets). Hence, the release of LLR built up over the years. Did Dimon ask the CFO how much can you give me in reversals? Very Likely. Did the CFO cave and release too much - doubt it as they are many oversight controls in place to ensure the "estimate" is reasonable and justifiable. Earnings releases are reviewed by legal counsel, BEFORE release to the public. Been there, done that as a cfo.
They'll still need LLR to cover the residential book. As they reduce exposure to mortgage assets on the balance sheet, the need for LLR will decline, hence releasing more resverse back through the P&L in the future.
On a related note, the LLR covers all consumer assets. I'll bet you a penny they took add'l provisions (expense) to cover auto loans adding to LLR. Mortgage reversals was probably 800M while add'l charges on Auto loans added 100M, net to 700M release.
NoVa
Credit quality in residential finance is improving, in aggregate. Home prices up slighly with households continuing to deleverage...
You CAN'T believe that. Sure, they dump the crappiest loans but when this farce of a real estate market locks up that "credit quality is improving" bullshit will go flying out the window and you know it.
See if this BKX bank index chart doesn't suggest how weak the financials are, how much further down they are headed (4% on the next leg), and how the over-exuberant broad equity indices are going to be dragged down in unison to adequately discount the economic contraction hiding in plain sight:
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=bkx&insttype=&freq=1&show=&time=7
legal costs of 1 billion to cover up illegal profits of 100 ?
More bonus!!
the word is MOAR. try to get with the program Panic Mode.
Steal a trillion, pay back a billion.
Justice or "just us"?
Either way, it's the deal of the century!
Rabinovich’s worst-case scenario, however, is an outcast Russia in the world’s financial markets with Putin “clinging to power.” He says that unless Russia reverses its aggression in Ukraine, cuts out the nationalist, isolationist rhetoric, and undertakes judicial and economic reform, collapse will start in a matter of months in Russia’s outlying regions, especially in provincial one-factory towns.
In this scenario, when trade links with overseas clients and suppliers get cut, hundreds of thousands of people will lose their livelihoods. And when they go out into the streets, Moscow will drown the protests in “rivers of blood,” says Rabinovich.Russia is a dangerous place for government critics but for some reason Rabinovich doesn’t seem concerned about his personal safety. He believes his email might be monitored and phone conversations recorded, and while the wheels of his jeep were punctured on two occasions earlier this year, he downplays the danger, saying that he hasn’t noticed anything suspicious beyond that.
Rabinovich’s forecasts have so far been spot-on. He often ends his Facebook status updates by writing, “I am not saying what might happen. I am saying what will for sure happen.”
Even Slava Rabinovich would like to be wrong about Russia.
Read more: Russia's economy could collapse in months, says financial forecaster | The Times of Israel http://www.timesofisrael.com/russias-economy-could-collapse-in-months-says-financial-forecaster/#ixzz3OnhByUYuI think Jesus is on Putins side, the clan in Isreal not so much
It just shows you that you can break the law..and just spend money on lawyers to keep the wolves at bay....make 10 billion..pay 1 billion in fines...a good business model
We see what you are doing and we know who you are!!!!!!
Shareholders bend over for Jamie.
Really is time to pull out the bazooka and have 3 Fed chiefs and Yellen herself out talking about no rate hike in 2015 and hell, let's throw in 2016 as well to see if we can stem the decline this morning. Maybe they can even get the Bernank to make a statement. Bet the call is already out to Greenspan to shut the f up on buying gold.
Just doing god's work...
The real surprise would be if JPM was NOT manipulating their numbers.
Damn it feels good to be a bankster.
Ahhh, the trickle down effect in action.
Bunch of friggin losers. Government insiders and market manipulators, still can't make expected revenue.
Nearing the 2nd anniversary of the death of a bright shining light.
https://archive.org/details/TheInternetsOwnBoyTheStoryOfAaronSwartz