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(Image Source: CNN Money)
BY LUCAS GEISLER
JP Morgan Chase released its first-quarter earnings report Friday with better-than-expected
results.
The average share price rose eighteen cents,
beating expectations, total profits were up 33 percent, even loan originations jumped
37 percent.
The bank also noted an uptick in its investment-banking
arm, which “turned a profit of 2.61 billion dollars, up 28 percent from a year earlier,
and 30 percent from the fourth quarter.” (Via Market Watch)
The earnings are especially good news for Chairman and CEO Jamie Dimon, who’s trying
to distance himself from last year’s “London Whale” fiasco which cost the bank $6.2 billion.
(Via The New York Times)
Seems sweet for JP Morgan, right? Then,
why are some analysts sour on the news?
Look no further than the consumer banking
division, which reduced its mortgage and credit card loss reserves by $1.15 billion. One
takeaway?
“Investors don’t typically like those
types of profits since they cannot be replicated in further quarters and are not a true indication
of demand for the bank’s services.” (Via CNN)
And while there was an increase in how many home mortgages JP Morgan doled out, Bloomberg
notes, record low interest rates and refinancing plans likely undercut any profits made.
“Most of the people who have had an interest in refinancing their homes appear to have
done so, and so mortgage origination volume, or at least a growth in mortgage origination
volume, as you can see here, Betty, also dropping dramatically.” (Via Bloomberg)
JP Morgan Chase is also in the process of shedding 17,000 jobs, which helped cut
expenses further. JP Morgan Chase had 259 thousand employees to start the year... but
“Total headcount fell to about 255,900 by the end of March. The total will shrink
by about 4,000 people this year..." (Via Business Week)
The report comes just a month before shareholders are expected to strip Dimon of his dual role
at the company.