JPMorgan Tops Profit, Revenue Forecasts

Published: Wednesday, 14 Apr 2010 | 9:16 AM ET
By: Antonia Oprita
Web Producer, CNBC.com

The company [JPM 47.73 1.86 (+4.05%) ] reported earnings per share of 74 cents, up from 40 cents a share in the same quarter a year ago. Revenue was $28.2 billion, up from $26.9 billion in the year-ago period.

On average, economists expected the bank to earn 64 cents a share, with revenue of $26.5 billion.

Net income at its investment bank unit was $2.5 billion, an increase of $865 million from the first quarter of 2009.

JPMorgan shares were up more than 3 percent ahead of the open.

In addition to its trading units, the company said it had strong results from asset management and commercial and retail banking.

"The fixed-income number was quite a bit better than expected… and equity trading wasn't bad either," Jeffery Harte, managing director in equity research at Sandler O'Neill, told CNBC's "Squawk Box."

Consumer credit delinquencies also improved, the bank said.

The balance sheet remained "very strong," during the quarter, with Tier 1 capital at $131.4 billion, with the Tier 1 capital ratio to assets at 11.5 percent, JPMorgan Chase said.

The bank plans to boost small-business lending to $10 billion by the end of the year, CEO Jamie Dimon said in the statement, adding that JPMorgan extended more than $2.1 billion in loans for small businesses during the quarter.

9,000 New Jobs

"As a company, we also aim to employ more people and create new jobs across the country and around the world, with plans to add nearly 9,000 new employees in the US alone," Dimon said.

He did not specify in what time interval these jobs will be added. Harte said the figure strikes him as a "high number."

Investors will have to wait a little more for JPMorgan to raise the dividend, according to Harte.

"I think in typical JPMorgan/Jamie Dimon fashion they're going to be as conservative as possible," he said, but added that he doesn't rule out a rise in dividend in the second part of the year.

Credit costs need to be lowered before the dividend can be raised, and this may happen in the second half of the year, JPMorgan CFO Mike Cavanagh said during a conference call, quoted by Reuters.

The key figure to look out for is the delinquency number, and the fact that it has been decreasing is a good sign, Harte added.

"As long as that keeps going down, that's going to be good news for JPMorgan and for the banks generally," he said.

There is some leveling out for delinquencies in consumer portfolios this year, as opposed to 2008 and 2009 when they were heading higher, and it is most pronounced in credit cards, Cavanagh said.

Lower loan loss reserves in the bank's credit card business reflect lower losses expected in the future, Cavanagh said.

He also said the economic outlook was improving and that small and mid-sized businesses are looking to borrow to expand.

Large corporate loans are doing well, while small business loans are rising and there will be a little growth in credit card loans, Dimon said during the conference call.

Corporations are in very good shape and have complete access to capital markets, he also said, adding: "the chance of a double dip is rapidly going away."

http://www.cnbc.com/id/36496268