JPMorgan's profit proves that Wall Street's titans still rule
Filed under: Company News, Investing, Earnings, JP Morgan Chase
Just a year ago, Wall Street's survival seemed far from assured. Titans of finance like Merrill Lynch and Lehman Brothers had disappeared, and even the strongest of those left standing, including JPMorgan Chase (JPM) and Goldman Sachs (GS), took billions of dollars in government assistance to bolster their balance sheets. The era of wild -- and lucrative -- financial risk-taking was supposed to be over. The Wall Street Journal even dubbed the final days before Lehman's collapse "the weekend that Wall Street died." Now, of course, it seems that rumors of its demise have been greatly exaggerated -- and the proof is in the profits. JPMorgan's $3.6 billion in net income last quarter, powered by investment banking revenue that rose 85 percent from a year ago, shows that the biggest banks can still make tons of money.
How much money? JPMorgan raked in $28.8 billion in revenue from July to September, the second consecutive quarter it posted record income. That helped it beat analysts' profit estimates by a whopping 31 cents a share. Last quarter it beat expectations by "just" 13 cents.
JPMorgan made more money underwriting debt and equity issues, but the real boost came from its fixed-income trading operation. All told, investment banking revenue fell short of the record levels it reached earlier this year, but it's still the biggest factor pushing profits at the company higher.
If there's one dark cloud, it's hanging over JPMorgan's credit-card business. With a $700 million loss, it was the only segment that didn't turn a profit last quarter.
CEO Jamie Dimon realizes that's a problem. "We know we will lose a lot of money next year on cards, and it could be north of a billion dollars the first and second quarter," he said on a conference call with analysts Wednesday morning. "That number will probably only start coming down as you see unemployment and charge-offs come down."
To guard against such losses, Dimon's company set aside an additional $2 billion, bringing the total value of JPMorgan's credit reserves to $31.5 billion.
But even here, the news isn't as bad as it might seem because JPMorgan is relying less on the card business these days. It accounted for about a quarter of revenues last year, but in 2009's third quarter, credit cards made up just under 18 percent. That they're less important to JP Morgan's bottom line could insulate it as consumers faced with high unemployment and falling home prices save more and borrow (and pay back) less. Clearly, JPMorgan was was wounded a year ago, but the injuries weren't nearly fatal.
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Reader Comments (Page 1 of 1)
10-14-2009 @ 2:38PM
Iridium said...
But JP Chase didn't actually make any real money.
All of the profits were from underwriting debt and trading. It is all fake paper wealth, funny accounting. The best part is every dime they used over the past year to invest came from the US government.
Sure JP can pay its employees with this fake money but the real business of being a bank has completely failed. They are now 100% invested in the business of financial manipulation.
Everyone that is paying back a Chase credit line should just stop. Everyone that has a mortgage backed by Chase should stop paying. This in retaliation for the corrupt and damaging practices they have engaged in. I should be allowed to sue Chase for damaging my credit score by changing the terms of thier contract.
Chase was forced to reinstate credit terms they offered to people and changed without legal right to do so. Refering to the 3.9% lifetime balance rate they offered good standing customers. They changed these rates even though in the contract it said that Chase could not change the rate unless you missed a payment.
JP Chase recieved billions from the US government to bail itself out. That should declare all other debts null and void.
REAL CHANGE START WITH REAL PEOPLE REBELLING AGAINST CORRUPTION. THERE IS NO GREATER CORRUPTION IN HISTORY THAN WHAT WENT ON EARLIER THIS YEAR BETWEEN THE BANKS AND THIS GOVERNMENT.
Chase can go after a few people but if everyone stops paying the giant will fall and they need to fall in order to right this economy.
LET EVERYONE FALL TO A 500 CREDIT SCORE. THEN A CREDIT SCORE WON'T MATTER. THE CREDIT SCORE IS ONE OF THE BIGGEST CONS OF ALL TIME, IT LIKE CHASE AND GOLDMAN NEEDS TO GO.
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10-14-2009 @ 4:04PM
Save America said...
Chase tripled my minimum payment which was my self-employment credit card. I had such a low interest rate that I was paying down the balance and paying peanuts in interest. Well that ended and the low interest rate was supposed to be for the entirety of the loans. I had several different loans based on low interest rates for the entirety of the loans. I quit paying and the money I normally sent them goes to my other debts. I have a lot of debt due to losing my job years ago and never being able to recover. I told them I am 60 years old, which is true and I have been smoking for 40 years which is true and I own nothing!!!!! I
also told them Obama said we have to make sacrifies and I told
them mine is my very, very high credit score!!! If I live long enough and pay off my smaller debt balances, I told them I will then start paying them!!! SO PEOPLE QUIT PAYING, WE WILL BE TAXED TO DEATH BY OUR GOVERNMENT AND BELIEVE ME, WE ALL WILL BE IN THE FOOD LINES AND WELFARE.
10-14-2009 @ 5:53PM
jeremiah said...
Not sure where you got your facts, but Chase was one bank that didn't need to take the Stimulus Dollars offered by the Obama Admin. When they tried to pay it back early, the Gov made them jump thru hoops, which they easily did. When Chase easily met the government’s criteria, the government raised the bar higher, and forced Chase to take even more stringent measures. Don’t forget Chase also bought Wamu during this time, and still paid back the 25 Billion dollars they were forced to take. Check it out. It’s all true!
10-14-2009 @ 6:57PM
John Feltman said...
Your comments are very perceptive and accurate. Chase has not felt the full impact of the the highest bankruptcy rate
in our history.And the numbers are reaching catastrophic
proportions. The funny-money of which you speak is destroying our economy and our currency. And Chase has done nothing to reach out and help mortgage holders who are victims of a failed economy and a failed political system
that does not comprehend the real causes of our present financial crisis. And,sadly, neither due the vast majority of Americans.
10-14-2009 @ 3:27PM
Paul said...
JP Mogan Number Twiddling proves that Wall Street still Lies. Today we will see the Government and Wall streets Number Twiddlers in action. That does Not mean everything is well. Any Investor who thinks the Alcoa or Bank reports are basis for everything else is absolutly Nuts or maybe needs to go back to Economics- 101. Banks are still playing numbers with Bailout Money and reporting that as Profit. Also, What we will see today is More Number Twiddling in the Stock market These numbers are Not real as there is absolutely Nothing to support them. Soon the Price of Number Twiddling Will Come Due and when it does America Will Fall into the Worst Depression and Panic Far Greater than 1930s. I urge Everyone to Call your Congress and Demand they Stop doing this twiddling or Lose their Jobs next November . As a Direct result of all of these Government " Bailouts " and Number Twiddling here is the Future Problem that Will Hit Us All by next year ; These so called " Bailout " and " Stimulus " Packages will produce only Minimal results and will Not work as planned. But, it is Going to Raise both Income and Property Taxes by up to 42 Percent across the Pay Scale by end of next year. Those who are below the Tax bracket will find they Too Will Be Taxed. Despite what they tell you on TV, that is the Word. Insurance Rates are also set to rise Big as well as inflation in Food, Energy and Healthcare. The Dollar Will Become Worthless. Yes the economy could very well become a Panic Like Germanys in the 1920s'. All of this Has to happen for this Worthless Playmoney Injection to have any value at All. With the Trillions theyre Printing and Spending on Bailouts along with Bogus Unsupported Numbers, the Economy Cannot Help but slide into a Panic that No one will be able to stop. Just do the Math
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10-14-2009 @ 3:55PM
TONY said...
I do not think that any person will be in the possition to invest a penny in Wall St. for the next century, not even with all the diversions from J.P. Morgan and the rest of the bunch of investment companies of the world. The people that they have a dollar rather to expend it than risk the money to feed the crooks.
TONY
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10-14-2009 @ 4:51PM
Stelios said...
A single mother goesinto a store and picks an item without paying and she is snteneced to prison. Wall Street Bankers, pick the taxpayers money and are not only not prosecuted but they are given more tax payers money. Does this make any sense?
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10-14-2009 @ 6:15PM
Peter B said...
j.p morgan outsources everything to India...NICE..Those are American jobs,while unemployment is at 10 pct.
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10-14-2009 @ 6:27PM
larry said...
DUHHHHHHHHHHHHH! Wall St. owns both political parties and gets what it wants.............
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10-14-2009 @ 7:28PM
willcorde said...
i want to be a top gunner in the revolution and have access to wall street bankers
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10-14-2009 @ 8:32PM
clinton league said...
jpmorgan survived because my children and their children and great great grand children will be paying for the debt they produced!!!!!!!!!!!!
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10-14-2009 @ 9:14PM
buddhaedi said...
The Wall Street giants are gushing profits only because AIG covered their derivative trading losses. AIG should be nearly out of their bailout funds and soon we'll see it bankrupt in no time. Buy the puts on AIG.
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10-14-2009 @ 9:36PM
otrpu said...
They bailed them once they'll just bail them again.
10-14-2009 @ 9:33PM
otrpu said...
And I'm supposed to be thrilled about this. Dam Chase raised my credit card interest, tho I'd never missed a payment. Also, denied my WaMu mortgage modification. Now the greedy bastards are advertising how great they've been doing.
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10-14-2009 @ 10:34PM
philip said...
if anyone of you hit like i do, including my two daugthers by chase .believe me do whatever you can to survive or bury yourself a live.i had being ripoff so bad by chase bank. no needle in the world cant sewing me
listen a short message by philip.
i have a 451.000 loan in a house .
the house only value 200.000 dollars chase only paid off 273.000 for me include a large down payment of 38.000 dollars at the time of the closing i have no lawyer neither chase not even a notary public.to clear the trick they told me dont worry about numbers this isn't a closing this is preclosure. after all i started fighting for closing statement to justify the 451.000 dollars spent .believe me brothers and sisters .they dont have it, they never have it, and they will never have it. by the way where is [hud]
??????? license to kill
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10-14-2009 @ 10:41PM
catsfan2112 said...
Every politician over the last two decades (at least) has profited from this financial rape and enslavement of the American people. Our wallets have been picked by the financial industry, the pharmaceutical industry, the insurance industry and all under the guise of promised reform. The only thing that has been RE-FORMED is the average American's wallet. I'm so tired of supporting these freeloading leeches of the American welfare state.
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10-15-2009 @ 8:43AM
philip said...
if I have a chance to seat and talk to chase [ceo] and jpm chase owner. I like to ask them, what color is their heart.
philip
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10-14-2009 @ 11:25PM
B said...
CHASE DID BORROW MONEY, AND ALREADY PAID IT BACK WITH INTEREST. PEOPLE SHOULD READ MORE AND NOT JUST THE STORYS THAT GET POSTED. THAT IS WHATS WRONG WITH AMERICANS. ALSO PEOPLE BITCHING ABOUT CREDIT CARD DEBT, YOU GOT YOURSELF THERE, NO ONE TOLD YOU TO CHARGE 20K ON A CREDIT CARD
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10-14-2009 @ 11:54PM
John said...
We bailed them out twice don't forget the 80's I think bringing back Glass-Steagall would be a good star "A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years.
Great nations rise and fall. The people go from bondage to spiritual truth, to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependence, from dependence back again to bondage." maybe Ben said that.
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10-15-2009 @ 8:58AM
lou said...
Everyone, instead of, or in addition to posting on here please write to your Senators and Congressman and tell them if they continue to allow bonuses to be paid out they will not be re elected.
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