JP Morgan (JPM): A Homer For Q2

JP Morgan (JPM) reported second-quarter 2009 net income of $2.7 billion, an increase of 36% compared with net income of $2.0 billion in the second quarter of 2008.  EPS was $.28 compared to consensus estimates of $.04.

Revenue was $25.6 billion, up from $18.3 billion last year.

In the retail financial division, net income was $15 million, a decrease of $488 million, or 97%, from the prior year. A higher provision for credit losses and higher noninterest expense were offset partially by higher net revenue.

In investment banking, net revenue was $7.3 billion, an increase of $1.8 billion from the prior year. Investment banking fees were up 29% to a record $2.2 billion and comprised the following: advisory fees, up 6% to $393 million; equity underwriting fees, up by $561 million to a record $1.1 billion; and debt underwriting fees, down 10% to $743 million. Fixed Income Markets revenue was a record $4.9 billion, up by $2.6 billion from the prior year, driven by strong results across all products, as well as the absence of markdowns related to leveraged lending funded and unfunded commitments and mortgage-related exposure.

In credit card services, the net loss was $672 million, a decline of $922 million from the prior year. The decrease was driven by a higher provision for credit losses, partially offset by higher net revenue.

In commercial banking, net income was $368 million, an increase of $13 million, or 4%, from the prior year. Higher net revenue, reflecting the impact of the Washington Mutual transaction, was predominantly offset by a higher provision for credit losses and higher noninterest expense.

Jamie Dimon, Chairman and Chief Executive Officer, commented on the results: “We are pleased that, despite a continued difficult economic environment, we were able to report $2.7 billion in earnings and record revenue of almost $28 billion. Of particular note, the Investment Bank reported record overall revenue for the first half of the year, which included record fees and Fixed Income Markets revenue for this quarter. In addition, Commercial Banking, Asset Management, Treasury & Securities Services and Retail Banking each delivered another quarter of solid performance. These results were negatively affected by the continued high levels of credit costs in Consumer Lending and Card Services, which we expect will remain elevated for the foreseeable future.”

Douglas A. McIntyre