JP Morgan

For JP Morgan Q3 financial result was a mixed bag. Investment bank and retail banking helped the bank report an increase in third-quarter profit. The bank’s Card Services and Consumer Lending segments however had a bad phase with the credit costs continuing to be high.

The bank has proved to be one of the best banks to weather the current crisis. In June the bank paid back the entire $25 billion assistance it had received under TARP.

Third quarter net earnings of the bank increased to $3.59 billion from $527 million last year. Net revenue for the quarter increased by 81% to $26.62 billion from $14.74 billion in the corresponding period last year. As expected the credit losses for the quarter increased by 40% to $8.1 billion from $5.8 billion last year.

Segment wise Investment Banking unit had the best performance with revenue increasing by 85% to $7.5 billion. The unit generated third-quarter net income of $1.9 billion. There was a 4% increase in investment banking fees to $1.7 billion while fixed Income markets revenue increased by $4.2 billion to $5.0 billion. From last year revenue declined in Equity Markets by 43% to $941 million.

Other units of the bank also registered healthy growth. With a net income of $1 billion retail banking unit of the bank registered an increase of 44% in net income vis-a-vis the same quarter last year. As expected the provision for credit losses increased to $208 million in the third quarter vis-a-vis $70 million in the prior year.

The bank’s financial performance to a great deal was brought down by the Consumer loan unit which registered a net loss of $1.0 billion. The unit had registered net loss of $659 million last year. This was more or less expected given the high credit costs with the provision for credit losses increasing to$3.8 billion from $2.0 billion last year. The revenue of this unit however increased by 72% to $3.6 billion helped by higher mortgage fees and related income.

Like the consumer loans unit credit card unit was also plagued by high credit costs and reported a net loss of $700 million in the third quarter. Higher provision for credit losses was mainly responsible for this loss.
Both commercial banking and asset management registered increase in revenue. Net income in the Commercial banking unit increased by 9% in the quarter to $341 million. Net revenue registered an increase of 30% to $1.5 billion. Asset Management net income showed a healthy increase of 23% to $430 million from third quarter of 2008.

Read more at: One Year Since The Crisis- High Credit Cost Continues To Plague The Banking Sector – Part I