JPMorgan Chase kicked off the banking industry’s earnings season with third-quarter profit falling 4 percent amid lingering mortgage troubles and weak investment banking results.þþBoth its consumer and Wall Street businesses were hit hard by the fiscal troubles ravaging Europe and fear of a fresh recession in the United States.þþThe bank announced profit of $4.26 billion, or $1.02 a share, compared with $4.4 billion, or $1.01 a share, in the period a year earlier. The results edged out analysts’ consensus estimate of 96 cents a share.þþ“All things considered, we believe the firm’s returns were reasonable given the current environment,” Jamie Dimon, JPMorgan’s chairman and chief executive, said in a statement.þþThe bank benefited from a $1.9 billion accounting gain tied to the increase in the perceived riskiness of its debt. It also charged off fewer credit cards loans and set aside less money to cover future losses in that division. That helped offset an additional $1 billion pre-tax increase, which the bank set aside to cover potential legal claims. It also took at $542 million pre-tax loss in its private equity unit, and its home lending division continues to bleed red ink.þþRevenue remains under pressure, falling to 11 percent from the prior quarter to $24.4 billion, amid a slowdown in stock and debt offerings that had propped up the bank’s results in prior quarters. Difficult trading conditions, slimmer lending profit margins, and the elimination of overdraft and other penalty fees also weighed on top-line growth.þþAs a diversified bank, JPMorgan is seen as an indicator for the financial industry, and it was among the first banks to prompt analysts to start cutting their earnings estimates when it warned of a sharp fall-off in its Wall Street businesses in early September.þþThe other big banks will report earnings next week; Citigroup and Wells Fargo are to release their results on Monday morning, and Bank of America, Morgan Stanley and Goldman Sachs are to follow later in the week. All are expected to report a similar slowdown in their investment banking businesses, with some analysts forecasting that Goldman Sachs will report its second quarterly loss as a public company.þþJPMorgan’s shares, which are down 24 percent for the year, rose nearly 3 percent to close at $33.20 on Wednesday.
Source: NY Times
