JPMorgan Chase kicked off the earnings period by reporting net income of $3.7 billion for the fourth quarter of 2011, compared with $4.8 billion for the fourth quarter of 2010.
Earnings per share were $0.90, compared with $1.12 a year ago. That essentially matched expectations. But as expected to a degree, the company also reported a debit valuation adjustment that resulted in a $567 million pre-tax loss, an accounting charge that the company does not consider indicative of operational results. So one could make the case that the bank actually beat earnings expectations.
There’s plenty of cause for concern, however. Chief among them: Revenue. The company’s revenue for the quarter declined to $22.2 billion, from $26.7 billion a year ago, or 17 percent, a problem that the entire industry faces. Revenue declined in most operating groups, the exceptions being asset management, treasury services and commercial banking. The investment banking unit saw revenue decline nearly 30 percent; investment banking fees were down 39 percent. Net income in the investment banking unit was down 52 percent from a year ago. Revenue in the retail financial services unit was down 17 percent.
The revenue shortfall is an industry-wide challenge. You can manage your expenses down to the bone, but in the end, you still have to ask: How will you grow the core business? There’s no easy answer right now.
For more:
- here’s the release
- here’s a look from Forbes
- here’s TheStreet.com’s article
Related articles:
Bank reporting period on deck
Sell-side analysts keep on cutting estimates
