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JPMorgan Beats Estimates on Mixed Asset Data

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JPMorgan Chase on Thursday, July 15, reported earnings per share of $1.09 for the second quarter vs. $0.28 in the same year-ago period, sharply topping analysts’ expectations of $0.70.

The bank is the first large financial institution to share its second-quarter results, which those of rivals Bank of America and Citigroup are expected on July 16.

JPMorgan’s net income was $4.8 billion, compared with $2.7 billion in the second quarter of 2009, but revenue was down 9% to $25.6 billion — slightly ahead of expectations.

“Our net income increased to $4.8 billion, including the benefit from a $1.5 billion reduction of loan loss reserves – which we do not believe represents normal ongoing earnings – partially offset by a charge of $550 million for the U.K. bonus tax,” said Chairman and CEO Jamie Dimon in a press release.

As of mid-day July 15, JPMorgan’s shares were trading down – along with the broader markets – by about 1.6% at $39.69 a share on close to average volume of 44 million shares. As of Thursday, the bank’s market capitalization is nearly $160 billion. Its 52-week trading range is $35-$48.

Asset Management

Net income in this division rose 11% from the prior year to $391 million on net revenue of $2.1 billion, which increased 4%.

This included rising sales within the private bank, which had revenues of $695 million, up 9% from the same year-ago period.

Revenues from retail asset management were $482 million, up 17%, while revenue from institutional sale came in at $433 million, down 11%.

In private-wealth management sales rose 4% to $348 million, up 4%, though revenue from JPMorgan Securities was $110 million, flat compared with the prior year.

Assets under supervision grew 6% year over year to $1.6 trillion, and assets under management were $1.2 trillion, a decrease of $10 billion, or 1%. The company attributed this decline in AUM “to outflows in liquidity products, predominantly offset by inflows in fixed income and equity products and the effect of higher market levels.”

Custody, brokerage, administration and deposit balances improved 29% to $479 billion, thanks “to custody and brokerage inflows and the effect of higher market levels,” the company said.

The provision for credit losses was $5 million, compared with $59 million in the prior year.

Reforms Coming

Before the Senate approved the financial services reform bill, 60-39, on Thursday, Dimon shared his concerns about the bill: “We recognize a number of positive aspects of the pending regulatory reform legislation, including systemic risk oversight and resolution authority. However, many challenges and uncertainties remain which may result in unintended consequences for our clients, the markets and our businesses.

“With a need for global regulatory coordination and hundreds of rules to be written, increased focus is critical in order to implement these reforms in a way that protects consumers and the competitiveness of the U.S. financial system, while ensuring the flow of safe and sound credit,” he said in a statement.


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