JP Morgan Q1 2009

JP Morgan Q1 2009 Investment Banking is the key driver this quarter --Record revenue and net income in the Investment Bank, revenue 8,300 mil vs -$302 mil Q4 2008 vs $ 3,011 Q1 2008 --NI 606 mil vs ($2,364 ) vs ($87 ) --Fixed Income Markets revenue was a record $4.9 billion, compared with $466 million in the prior year. The increase was driven by record results in credit trading, emerging markets and rates, combined with strong results in currencies and gains of $422 million from the widening of the firm’s credit spread on certain structured liabilities. --These results were offset partially by $711 million of net markdowns on leveraged lending funded and unfunded commitments, as well as $214 million of net markdowns on mortgage-related exposures. Equity Markets revenue was a record $1.8 billion, up by $797 million from the prior year, reflecting strong trading results and client revenue, particularly in prime services, as well as gains of $216 million from the widening of the firm’s credit spread on certain structured liabilities. --The provision for credit losses was $1.2 billion, compared with $618 million in the prior year, due to a higher allowance reflecting a weakening credit environment. Net charge-offs were $36 million, compared with net charge-offs of $13 million in the prior year. The allowance for loan losses to average loans retained was 6.68% for the current quarter, compared with 2.55% in the prior year. Nonperforming loans were $1.8 billion, up by $1.5 billion from the prior year and $620 million from the prior quarter, reflecting a weakening credit environment. Retail Banking inline with Q4 2008 --sales 8,835 $ 8,684 $ 4,763 --NI 474 $ 624 ($311) The provision for credit losses was $3.9 billion, an increase of $1.2 billion, or 44%, from the prior year. Delinquency rates increased due to overall weak economic conditions, while housing price declines continued to drive increased loss severities, particularly for high loan-to-value home equity and mortgage loans. The provision included $1.7 billion in additions to the allowance for loan losses, primarily for the home lending portfolio. Home equity net charge-offs were $1.1 billion (3.93% net charge-off rate2), compared with $447 million (1.89% net charge-off rate) in the prior year. Subprime mortgage net charge-offs were $364 million (9.91% net charge-off rate2), compared with $149 million (3.82% net charge-off rate) in the prior year. Prime mortgage net charge-offs were $312 million (1.95% net charge-off rate2), compared with $50 million (0.56% net charge-off rate) in the prior year. Card Service inline with Q4 08 but worse because or more credit provision --sales: 5,129 $ 4,908 $ 3,904 --ni: ($547 ) ($371 ) $ 609 The managed provision for credit losses was $4.7 billion, an increase of $3.0 billion, or 179%, from the prior year. The provision reflected a higher level of charge-offs and an increase of $1.2 billion in the allowance for loan losses, due to a weakening credit environment. The managed net charge-off rate for the quarter was 7.72%, up from 4.37% in the prior year and 5.56% in the prior quarter. The 30-day managed delinquency rate was 6.16%, up from 3.66% in the prior year and 4.97% in the prior quarter. Excluding Washington Mutual, the managed net charge-off rate for the first quarter was 6.86% and the 30-day delinquency rate was 5.34%. TREASURY & SECURITIES SERVICES (TSS) --sales 821 $ 2,249 $ 1,913 --NI 308 $ 533 $ 403 --The decrease (of revenue) was driven by lower securities lending balances, primarily as a result of declines in asset valuations and demand, as well as the effects of market depreciation on assets under custody, partially offset by higher net interest income. --it bode well for STT revenue