The beginning is not the best. JP Morgan Chase opens the ball for the American banking quarterly, disappointing market expectations. Between January and March, the New York banking giant recorded a drop in profits and revenues of 19 and 8%, respectively. In the wake of these data, in the Wall Street pre-market the stock of the institute travels down by 2,4%, at around 56 dollars per share.
In detail, JP Morgan reported net income of $5,27 billion ($1,28 per share), versus $6,53 billion in the same period last year ($1,59 per share). The revenue fell to $23,86 billion, from 25,84 billion in the same period last year. Analysts had estimated earnings of $1,40 per share on $24,53 billion in business.
JP Morgan's Board of Directors has also given the green light to a increase in quarterly dividends from 38 to 40 cents per share and repurchase of treasury securities for $6,5 billion, to be carried out between the second quarter of this year and the end of the first quarter of 2015.
"The year has started well, especially if we take into consideration the headwinds that have hit the entire mortgage sector", commented the CEO of the group, Jamie Dimon, who expressed "growing confidence in the economy, with consumers, large and medium-sized businesses in ever better shape and a real estate sector that has turned a corner in many markets." Dimon also stressed that JP Morgan "is doing its part to support the recovery."
It was in particular that weighed on JP Morgan's accounts the slowdown in activities related to home loans: Mortgage disbursement fell to $17 billion, 68% less than in the first quarter of 2013. Investment banking also fell, with net income down 15%. Revenue from its fixed-income business, traditionally one of the bank's strengths, fell to $3,76 billion from $4,75 billion in the same period last year (but up from $3,2 billion in fourth quarter).
Investors, who consider JP Morgan's results to be the litmus test of the US banking sector, show signs of nervousness: the company's performance shows that, despite signs of growth in loans, the giants of the sector continue to deal with a economy still sluggish and they discount the effect of low interest rates on the profits generated by credit, investment and trading.
For JP Morgan another source of concern are the expenses, especially since it has had to face legal proceedings and requests to change internal policies and procedures. In any case, in the first quarter the Bank "did not have concrete" expenses related to legal proceedings, against 300 million in the same period last year and 800 million in the fourth quarter.
