JPMorgan Chase (JPM, Financial) is the first of the banking industry to report first-quarter earnings in a quarter that’s expected to be weak for the industry and economy as well.
Before the bell on Wednesday JPMorgan reported total revenue of $24.1 billion and earnings per share of $1.35. Revenue and earnings both beat analysts’ expectations with revenue $680 million higher than expected and EPS beating expectations by 9 cents.
Revenue and earnings for the quarter, however, were both down from the comparable quarter. Revenue was down 3%, and EPS was 7% lower. Trading revenue and energy exposure continued to be the two main factors dragging on growth in the sector.
For the quarter, credit provisions from downgrades in the energy sector increased $713 million as default risks continued to increase for energy sector companies. Meanwhile, in the Corporate and Investment Banking segment, trading revenue was down 13% as measured by Markets and Investors Services, which reported revenue of $5.7 billion down from $6.6 billion in the comparable quarter.
Consumer and Community Banking was the company’s strongest business segment during the quarter. As consumer metrics continue to improve, the Consumer and Community Banking segment produced a revenue gain of 4% with a net income increase of 12%. Asset Management also reported a strong quarterly gain in net income with an increase of 17% from the comparable quarter.
Corporate growth continued to struggle. In Investment Banking, revenue was down 19%. In Commercial Banking, net income fell 17% on slightly higher revenue of $1.8 billion.
For the day, the stock opened higher at $60.48 up from its Tuesday close of $59.28. Year to date JPMorgan is down 7.66%. Banking stocks overall for the year are down 8.83% as measured by the Standard & Poor's Banks Select Industry Index.
Large bank conglomerates Bank of America (BAC, Financial), Wells Fargo (WFC, Financial) and Citigroup (C, Financial) all report first-quarter earnings later in the week.
Also during the week the Federal Reserve released details on its analysis of large banks and their living will plans which determines how banks manage bankruptcy scenarios with minimal taxpayer costs. Regulators have requested bankruptcy plan revisions from five large banks which are required to be returned by October.
Disclosure: I do not currently own shares of JPMorgan.
