JP Morgan's (JPM) No Where Quarter

JP Morgan (JPM) reported 2007 third-quarter net income of $3.4 billion, up from $3.3 billion in the third quarter of 2006. Earnings per share of $0.97 were up 5%, compared with $0.92 per share in the third quarter of 2006.

Investment banking numbers were weak. Net income was $296 million, down by $680 million, or 70%, compared with the prior year. The decrease in earnings reflected lower net revenue as well as a higher provision for credit losses, partially offset by lower noninterest expense. Net revenue was $2.9 billion, down by $1.9 billion, or 39%, from the prior year. Investment banking fees were $1.3 billion, down by 6% from the prior year, reflecting lower debt underwriting fees offset partially by record advisory fees. Debt underwriting fees were $468 million, down 34%, reflecting lower bond underwriting and loan syndication fees, which were negatively affected by market conditions.

Corporate banking made up for most of the investment banking fall-off. Net income was $513 million, compared with $31 million in the prior year, benefiting from increased net revenue and lower noninterest expense. Prior-year results also included net income from discontinued operations of $65 million. Net revenue was $1.0 billion, compared with $289 million in the prior year. The increase was driven by Private Equity gains of $766 million, compared with $226 million.

The market thought well enough of the results, moving the stock up about 3% before the open.

Douglas A. McIntyre