The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
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I find it curious that on Friday JPM stated they only have 46,000 ounces of gold in storage. According to articles I have read it seems they have sold 60 times the amount of available gold in certs. Which means they cant cover what they sold......
JPMorgan Chase Chief Executive Jamie Dimon has defended the banking sector when speaking in today's first session in the World Economic Forum in Davos. He said that a lot has been done and very quickly and that the focus must now be on capital, the basics. Dimon also stated that all countries use financial derivatives out of necessity and not because banks forced them. "Five years and we don't have mortgage rules yet, it's a very complex thing that we should make a lot simpler," he added. "You want financial services you just don't want to be leveraged and blow up." Dimon apologised to shareholders for the $6bn in losses provoked by the so-called "whale trade", labelling it a terrible mistake. "If you're a shareholder of mine, I apologise deeply," he said. "But we had record results and life goes on." Despite the losses from the bad trades, the bank still earned a record $21.3bn last year. This session at Davos was on the 'Global Financial Context' and included other contributors such as UBS President Axel Weber and Prudential Chief Executive Tidjane Thiam.
Positive Points: The quarterly results have materialised at the upper end of analyst forecasts. Importantly, and given the importance of the US housing market to the US economy, the chief executive previously noted that "we believe the housing market has turned the corner." Mortgage Banking reported strong production revenue; originations of $51.2 billion, up 33%. The bank has shut down the risky trading activities which caused it trouble, overhauled management, and enhanced the governance standards within the group. The London office will now maintain a more conservative approach, management previously highlighted. The bank also said the total 2012 pay for its CEO would be about half what he received in 2011. Management continued to highlight a 'fortress' type balance sheet. The group enjoys diversification in both business type and geographical location, a trait which some other banks do not enjoy.
Negative Points: A number of negative exceptional items continue to impact performance. These included a $900 million expense for mortgage related matters, predominantly the Independent Foreclosure Review settlement and a $567 million loss from debit valuation adjustments at its Corporate & Investment Bank. Thanks to a major trading loss relating to its London office reported previously, the bank's reputation for risk management has come into question. As a result of the trading losses, a host of international regulators and agencies have been probing the bank. Like its peers, JPMorgan continues to face increasing regulator costs and uncertainties. JPMorgan's share buyback programme was previously suspended following discussion with the Federal Reserve. The buyback programme was halted in May in order to preserve capital until the trading losses could be unwound. Concerns regarding the health of the US government's finances continue to be expressed.
Financial Highlights: Earnings per share rose by 54% to $1.39 Mortgage loan originations rose by 33% to $51.2 billion The provision for credit losses fell by 70% to $656 million Basel I Tier 1 common ratio of 11.0%, up from 10.4% in the third quarter
Fourth quarter results: The news saw the bank again reporting solid progress, although given high expectations beforehand, the share price declined marginally in opening trade. The Chief Executive noted that "the firm's results reflected strong underlying performance across virtually all our businesses for the quarter." At its Consumer & Community Banking division, net income rose to $2 billion in the quarter, up from $1.6 billion in the year before. The group's mortgage business led the way. Mortgage loan originations rose by 33% to $51.2 billion compared to Q4 2011, aided by higher mortgage fees and related income. For the more traditional banking operations, net interest income was $7.3 billion, down $220 million, or 3%, driven by lower deposit margins and lower loan balances due to portfolio runoffs. However, credit loss provisions continued to fall, coming in at $1.1 billion, compared with $1.8 billion in the prior year and $1.9 billion in the prior quarter. At its Corporate & Investment Bank division, net income or profit rose to just over $2 billion in the quarter, compared to just over $1 billion for Q4 2011. Investment banking fees of $1.7 billion were reported, up 54% and consisting of record debt underwriting fees of $990 million (+79%). Assets under custody were a record $18.8 trillion, up 12% from the prior year. In all, while ongoing US political budget negotiations currently overshadow, US Central Bank policy remains highly accommodative with JP Morgan currently benefiting from improving trends in the US housing market
Third quarter results: "the housing market has turned the corner". In the wake of what has been a difficult year for the bank, its latest results appeared to come in at the upper end of analyst forecasts. Despite the hit to management's reputation thanks to earlier year trading losses, the Chief Executive noted that "the firm had reported strong performance across all of our businesses". The Investment Bank reported favorable Fixed Income Market performance and maintained its number one ranking for Global Investment Banking fees. Its Consumer & Business Banking business saw average deposits up 9% and Business Banking loan balances grew for the eighth consecutive quarter to a record $19 billion, up 8% compared with the prior year. Mortgage Banking originations were $47 billion, up 29% compared to Q3 2011. Credit Card sales volume rose by 11% year over year. Importantly, and given the importance of the US housing market to the US economy, the Chief Executive noted that "we believe the housing market has turned the corner." For its Mortgage Banking business, credit trends continued to modestly improve. As a result, the bank reduced its related loan loss reserves by $900 million. In all, despite ongoing concerns for the health of the world economy, a perceived turn in the US housing market, combined with increased assistance from the US Central Bank - it is buying mortgage backed securities as part of its QE programme
JP Morgan Chase & Co. is one of the oldest financial services firms in the world. It services clients in more than 100 countries. It is a leader in financial services with assets of $2.3 trillion. Group core businesses include: Asset Management, Investment Banking, Private Banking, Securities Services, Treasury Services and Commercial Banking. The group was formed in 2000, when Chase Manhattan Corporation merged with JP Morgan & Co
Positive Points: The quarterly results have materialised at the upper end of analyst forecasts. Importantly, and given the importance of the US housing market to the US economy, the chief executive noted that "we believe the housing market has turned the corner." Its Mortgage Banking business reported record production revenue - originations rose by 29% to $47 billion. The bank has shut down the risky trading activities at the CIO, overhauled management, and enhanced the governance standards within the group. The London office will now maintain a more conservative approach, management previously said. Management continued to highlight a 'fortress' type balance sheet. Management reported Basel I Tier 1 common ratio of $135 billion or 10.4%, up from 9.9% in the prior quarter. The group enjoys diversification in both business type and geographical location, a trait which some other banks do not enjoy.
Negative Points: A number of negative exceptional items continue to impact performance. A $825 million pre-tax incremental charge ($0.13 per share after-tax decrease in earnings) was swallowed due to regulatory guidance on certain residential loans in Real Estate Portfolios. A $684 million pre-tax expense ($0.11 per share after-tax decrease in earnings) was taken for additional litigation reserves at its Corporate business. The bank's London based Chief Investment Office (CIO) became notorious in May when JPMorgan said bad derivatives bets had triggered about $2 billion of paper losses, a figure that turned into $4.4 billion of actual losses in the second quarter. The bank’s reputation for risk management has come into question. As a result of the trading losses, a host of international regulators and agencies have been probing the bank. Besides the FBI and FSA, they include the U.S. Securities and Exchange Commission, the Federal Deposit Insurance Corp, the U.S. Commodity Futures Trading Commission, the U.S. Treasury's Office for the Comptroller of the Currency, and the Federal Reserve Bank of New York. Like its peers, JPMorgan continues to face increasing regulator costs and uncertainties. JPMorgan's share buyback programme was previously suspended following discussion with the Federal Reserve. The buyback programme was halted in May in order to preserve capital until the trading losses could be unwound. Concerns regarding the health of the US government's finances continue to be expressed.
Financial Highlights: Revenue of $25.9 billion was reported, up 6% compared with the prior year. Income for the quarter came in at $5.7 billion, up from the $4.3 billion reported in Q3 2011. Earnings per share of $1.40 were reported, up from the $1.02 reported for Q3 last year. In relation to the balance sheet and the capital cushion, Basel I Tier 1 common ratio of 10.4% was reported, up from 9.9% in the second quarter.
Third quarter results: "the housing market has turned the corner". In the wake of what has been a difficult year for the bank, its latest results appeared to come in at the upper end of analyst forecasts. Despite the hit to management's reputation thanks to earlier year trading losses, the Chief Executive noted that "the firm had reported strong performance across all of our businesses". The Investment Bank reported favorable Fixed Income Market performance and maintained its number one ranking for Global Investment Banking fees. Its Consumer & Business Banking business saw average deposits up 9% and Business Banking loan balances grew for the eighth consecutive quarter to a record $19 billion, up 8% compared with the prior year. Mortgage Banking originations were $47 billion, up 29% compared to Q3 2011. Credit Card sales volume rose by 11% year over year. Importantly, and given the importance of the US housing market to the US economy, the Chief Executive noted that "we believe the housing market has turned the corner." For its Mortgage Banking business, credit trends continued to modestly improve. As a result, the bank reduced its related loan loss reserves by $900 million. In all, despite ongoing concerns for the health of the world economy, a perceived turn in the US housing market, combined with increased assistance from the US Central Bank - it is buying mortgage backed securities as part of its QE programme – now form a central plank in favourable analyst opinion
Company overview JP Morgan Chase & Co. is one of the oldest financial services firms in the world. It services clients in more than 100 countries. It is a leader in financial services with assets of $2.3 trillion. Group core businesses include: Asset Management, Investment Banking, Private Banking, Securities Services, Treasury Services and Commercial Banking. The group was formed in 2000, when Chase Manhattan Corporation merged with JP Morgan & Co.
Positive Points: The bank has shut down the risky trading activities at the CIO, overhauled management, and enhanced the governance standards within the group. The London office will now maintain a more conservative approach, the bank said. Despite the massive loss caused by a poorly executed trade using complex financial instruments, the bank was able to post second-quarter results that exceeded analyst expectations. The group's Retail Financial Services division delivered a strong quarter. Net income was $2.27 billion, compared with $383 million in the prior year. Management continued to highlight a 'fortress' type balance sheet. During the first half of 2012, the bank provided $130 billion of credit to consumers and nearly $10 billion of credit to small businesses. The group enjoys diversification in both business type and geographical location, a trait which some other banks do not enjoy.
Negative Points: The bank's London based Chief Investment Office became notorious in May when JPMorgan said bad derivatives bets had triggered about $2 billion of paper losses, a figure that turned into $4.4 billion of actual losses in the second quarter and may increase further. As a result of the trading losses, a host of international regulators and agencies are probing the bank. Besides the FBI and FSA, they include the U.S. Securities and Exchange Commission, the Federal Deposit Insurance Corp, the U.S. Commodity Futures Trading Commission, the U.S. Treasury's Office for the Comptroller of the Currency, and the Federal Reserve Bank of New York. The controversial loss has come at a difficult time. The US economy has been exhibiting fresh signs of an economic slowdown, due in large part to huge uncertainty surrounding Europe's debt crisis and slowing growth in China. JPMorgan's share buyback programme remains suspended "after discussion with the Federal Reserve", the bank said. The buyback programme was halted in May in order to preserve capital until the trading losses have been unwound. Given its size, the bank possesses a high level of exposure to the US consumer and any potential consumer weakness encountered. JP Morgan maintains relatively large investment banking and consumer credit exposure.
Financial Highlights: J.P. Morgan reported a profit of $4.96 billion, down from $5.43 billion a year earlier. Quarterly total net revenue amounted to $22.9 billion, down 17%, when compared to $26.78 billion in 2011. The bank's investment banking arm posted a profit of $1.91 billion, down 7% from a year earlier but up 14% from the first quarter. The bank's retail-services business, which handles consumer and small-business clients, reported a profit of $2.27 billion, significantly up from $383 million a year earlier and up 29% from the first quarter.
Second quarter results: J.P. Morgan Chase & Co.'s earnings fell 8.7% as the largest US bank by assets saw a double-digit decline in revenue and recorded a $4.4 billion trading loss within its Chief Investment Office's synthetic credit portfolio. The trading loss affected results not just for the second quarter, but the first quarter too. In a separate announcement to its results, the bank said it would reduce its previously reported first-quarter profit by 8.5%, or $459 million, on valuations of certain positions in the CIO’s synthetic credit portfolio. It said there was "a material weakness" in its internal control over financial reporting for the first quarter and its internal review is ongoing. JP Morgan weathered the financial crisis better than most of its peers, and the trading losses knocked the bank's reputation at a time when large banks are fighting efforts by regulators to rein in risky trading. The so-called Volcker rule, set to take effect this month, would restrict the banks' ability to trade with their own money. “Since the end of the first quarter, we have significantly reduced the total synthetic credit risk in CIO”, Chief Executive Jamie Dimon said. "The reduction in risk has brought the portfolio to a scale that allowed us to transfer substantially all remaining synthetic credit positions to the Investment Bank." In the wake of the trading scandal the market consensus for JP Morgan remains a buy for the time being.
JP Morgan Chase & Co. is one of the oldest financial services firms in the world. It services clients in more than 100 countries. It is a leader in financial services with assets of $2.3 trillion. Group core businesses include: Asset Management, Investment Banking, Private Banking, Securities Services, Treasury Services and Commercial Banking. The group was formed in 2000, when Chase Manhattan Corporation merged with JP Morgan & Co
"As 2012 looks set to be another fantastic year for the company, we look forward to reporting further operational success as we achieve our goal of developing our world class acreage, thereby creating further value for our shareholders," he added. The firm said it was eyeing a move from the Alternative Investment Market to the premium list "as part of establishing the company as one of the major independent exploration and production players listed on the London Stock Exchange".