Another Day, Another Bank Beats Estimates...

[GRG55]

Ho, hum...what a surprise...:rolleyes:

JPMorgan Profit Beats Estimates on Record Revenue

April 16 (Bloomberg) -- JPMorgan Chase & Co., the second- largest U.S. bank by assets, reported profit for the first quarter that beat analysts’ estimates on record fixed-income trading revenue.

Earnings fell 10 percent to $2.14 billion, or 40 cents a share, compared with $2.37 billion, or 68 cents, a year earlier, the New York-based bank said today in a statement. Per-share profit was expected to be 32 cents, according to the average estimate of 18 analysts surveyed by Bloomberg...

...Revenue in the investment-banking unit was a record $8.3 billion, including $4.9 billion from fixed-income trading alone. The business generated $3 billion in the same period a year earlier. Investment-banking profit was $1.61 billion, compared with a loss of $87 million in the first quarter of 2008.

Revenue was offset by $711 million in writedowns on leveraged loans and $214 million on mortgage-related securities.

Retail banking posted a profit of $474 million, compared with a loss of $311 million in last year’s first quarter. JPMorgan set aside $3.88 billion to cover bad loans in the quarter and said “delinquency rates continued to increase.”

The bank set aside $4.2 billion to cover bad loans, bringing the total reserve to $28 billion. Credit cards, a unit Dimon said in February he didn’t expect to be profitable this year, lost $547 million in the quarter. The default rate climbed to 7.72 percent from 5.56 percent in the fourth quarter and 4.37 percent in the previous year...

[GRG55]

Re: Another Day, Another Bank Beats Estimates...

Ho, hum...what a surprise...:rolleyes:

JPMorgan Profit Beats Estimates on Record Revenue

April 16 (Bloomberg) -- JPMorgan Chase & Co., the second- largest U.S. bank by assets, reported profit for the first quarter that beat analysts’ estimates on record fixed-income trading revenue...

No comment...

JPMorgan CEO Says Firm Has Ability to Pay Back Tarp Tomorrow

April 16 (Bloomberg) -- JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said the firm has the ability to repay U.S. government rescue funds “tomorrow.” The firm is awaiting guidance from Treasury on the move, he said on a conference call with reporters today.

“We could pay it back tomorrow,” Dimon said.

[santafe2]

Re: Another Day, Another Bank Beats Estimates...

JPMorgan CEO Says Firm Has Ability to Pay Back Tarp Tomorrow...

No surprise, GS and JPM are eating other bank's lunch. They've been doing this for years. The government won't let them pay the TARP funds back because it will be obvious that the other banks can't pay it back. It's the GS/JPM version of good bank/bad bank. They're going to make sure investors, wall street, the MSM and main street know they're different than C and BAC and others. It's probably unfortunate for all of us that any of the banks survived intact during this round of the downturn. As another iTuliper posted the other day...don't bet against FIRE, it's not going away quickly.

[c1ue]

Re: Another Day, Another Bank Beats Estimates...

So let's see so far:

GS: $1.8B profit. $1.3B losses in 'lost' month of December. Selling $5B more equity to raise capital.

JPM: $2.1B profit. $1.6B from investment bank operations. Credit cards swung from a profit to a loss - something like $1B switch itself - and the CC division loss cancelling out all other 'normal' banking operations except commercial banking.

WFC: 'predicting' $3B profit. Maybe with proceeds from some other magical action like 'finding' 400 tons of unclaimed gold in their vaults since WFC doesn't do investment banking. Or maybe AIG CDS payments...

I can't wait for the passel of lies which will comprise the 'C' earnings 'report'.

[Supercilious]

Re: Another Day, Another Bank Beats Estimates...

Ho, hum...what a surprise...:rolleyes:

JPMorgan Profit Beats Estimates on Record Revenue

April 16 (Bloomberg) -- JPMorgan Chase & Co., the second- largest U.S. bank by assets, reported profit for the first quarter that beat analysts’ estimates on record fixed-income trading revenue.

Earnings fell 10 percent to $2.14 billion, or 40 cents a share, compared with $2.37 billion, or 68 cents, a year earlier, the New York-based bank said today in a statement. Per-share profit was expected to be 32 cents, according to the average estimate of 18 analysts surveyed by Bloomberg...

...Revenue in the investment-banking unit was a record $8.3 billion, including $4.9 billion from fixed-income trading alone. The business generated $3 billion in the same period a year earlier. Investment-banking profit was $1.61 billion, compared with a loss of $87 million in the first quarter of 2008.

Revenue was offset by $711 million in writedowns on leveraged loans and $214 million on mortgage-related securities.

Retail banking posted a profit of $474 million, compared with a loss of $311 million in last year’s first quarter. JPMorgan set aside $3.88 billion to cover bad loans in the quarter and said “delinquency rates continued to increase.”

The bank set aside $4.2 billion to cover bad loans, bringing the total reserve to $28 billion. Credit cards, a unit Dimon said in February he didn’t expect to be profitable this year, lost $547 million in the quarter. The default rate climbed to 7.72 percent from 5.56 percent in the fourth quarter and 4.37 percent in the previous year...

The revenue from my ocean front real estate properties in Switzerland and Austria also increased in Q1 with $200 mil dollars. If anyone wants to buy high value ocean front properties in Switzerland and Austria please send me a pm. I wouldn't depart from such good investments but I need cash for a killer deal (I'm going to buy the Eiffel Tower for a very good price and sell it as scrap iron )

[santafe2]

Re: Another Day, Another Bank Beats Estimates...

I can't wait for the passel of lies which will comprise the 'C' earnings 'report'.

I want to hear Pandit say that C is ready to pay back the $45B in TARP funds by selling their box seats at the new Mets stadium. Maybe Pandit can show that he "gets it", by scalping tickets in the parking lot.

[itpfan]

Re: Another Day, Another Bank Beats Estimates...

Ho, hum...what a surprise...:rolleyes:

JPMorgan Profit Beats Estimates on Record Revenue

April 16 (Bloomberg) -- JPMorgan Chase & Co., the second- largest U.S. bank by assets, reported profit for the first quarter that beat analysts’ estimates on record fixed-income trading revenue.

Earnings fell 10 percent to $2.14 billion, or 40 cents a share, compared with $2.37 billion, or 68 cents, a year earlier, the New York-based bank said today in a statement. Per-share profit was expected to be 32 cents, according to the average estimate of 18 analysts surveyed by Bloomberg...

...Revenue in the investment-banking unit was a record $8.3 billion, including $4.9 billion from fixed-income trading alone. The business generated $3 billion in the same period a year earlier. Investment-banking profit was $1.61 billion, compared with a loss of $87 million in the first quarter of 2008.

Revenue was offset by $711 million in writedowns on leveraged loans and $214 million on mortgage-related securities.

Retail banking posted a profit of $474 million, compared with a loss of $311 million in last year’s first quarter. JPMorgan set aside $3.88 billion to cover bad loans in the quarter and said “delinquency rates continued to increase.”

The bank set aside $4.2 billion to cover bad loans, bringing the total reserve to $28 billion. Credit cards, a unit Dimon said in February he didn’t expect to be profitable this year, lost $547 million in the quarter. The default rate climbed to 7.72 percent from 5.56 percent in the fourth quarter and 4.37 percent in the previous year...

Is AIG responsible for bank earnings? - the following was published by Tyler Durden, author at Zero Hedge webiste http://zerohedge.blogspot.com:80/200...for-banks.html

Sunday, March 29, 2009

Exclusive: AIG Was Responsible For The Banks' January & February Profitability

Posted by Tyler Durden at 6:35 PM
Zero Hedge is rarely speechless, but after receiving this email from a correlation desk trader, we simply had to hold a moment of silence for the phenomenal scam that continues unabated in the financial markets, and now has the full oversight and blessing of the U.S. government, which in turns keeps on duping U.S. taxpayers into believing everything is good.

I present the insider perspective of trader Lou (who wishes to remain anonymous) in its entirety:

"AIG-FP accumulated thousands of trades over the years, all essentially consisted of selling default protection. This was done via a number of structures with really only one criteria - rated at least AA- (if it fit these criteria all OK - as far as I could tell credit assessment was completely outsourced to the rating agencies).

Main products they took on were always levered credit risk, credit-linked notes (collateral and CDS both had to be at least AA-, no joint probability stuff) and AAA or super senior portfolio swaps. Portfolio swaps were either corporate synthetic CDO or asset backed, effectively sub-prime wraps (as per news stories regarding GS and DB).

Credit linked notes are done through single-name CDS desks and a cash desk (for the note collateral) and the portfolio swaps are done through the correlation desk. These trades were done is almost every jurisdiction - wherever AIG had an office they had IB salespeople covering them.

Correlation desks just back their risk out via the single names desks - the correlation desk manages the delta/gamma according to their correlation model. So correlation desks carry model risk but very little market risk.

I was mostly involved in the corporate synthetic CDO side.

During Jan/Feb AIG would call up and just ask for complete unwind prices from the credit desk in the relevant jurisdiction. These were not single deal unwinds as are typically more price transparent - these were whole portfolio unwinds. The size of these unwinds were enormous, the quotes I have heard were "we have never done as big or as profitable trades - ever".

As these trades are unwound, the correlation desk needs to unwind the single name risk through the single name desks - effectively the AIG-FP unwinds caused massive single name protection buying. This caused single name credit to massively underperform equities - run a chart from say last September to current of say S&P 500 and Itraxx - credit has underperformed massively. This is largely due to AIG-FP unwinds.

I can only guess/extrapolate what sort of PnL this put into the major global banks (both correlation and single names desks) during this period. Allowing for significant reserve release and trade PnL, I think for the big correlation players this could have easily been US$1-2bn per bank in this period."

For those to whom this is merely a lot of mumbo-jumbo, let me explain in layman's terms:
AIG, knowing it would need to ask for much more capital from the Treasury imminently, decided to throw in the towel, and gifted major bank counter-parties with trades which were egregiously profitable to the banks, and even more egregiously money losing to the U.S. taxpayers, who had to dump more and more cash into AIG, without having the U.S. Treasury Secretary Tim Geithner disclose the real extent of this, for lack of a better word, fraudulent scam.

In simple terms think of it as an auto dealer, which knows that U.S. taxpayers will provide for an infinite amount of money to fund its ongoing sales of horrendous vehicles (think Pontiac Azteks): the company decides to sell all the cars currently in contract, to lessors at far below the amortized market value, thereby generating huge profits for these lessors, as these turn around and sell the cars at a major profit, funded exclusively by U.S. taxpayers (readers should feel free to provide more gripping allegories).

What this all means is that the statements by major banks, i.e. JPM, Citi, and BofA, regarding abnormal profitability in January and February were true, however these profits were a) one-time in nature due to wholesale unwinds of AIG portfolios, b) entirely at the expense of AIG, and thus taxpayers, c) executed with Tim Geithner's (and thus the administration's) full knowledge and intent, d) were basically a transfer of money from taxpayers to banks (in yet another form) using AIG as an intermediary.

For banks to proclaim their profitability in January and February is about as close to criminal hypocrisy as is possible. And again, the taxpayers fund this "one time profit", which causes a market rally, thus allowing the banks to promptly turn around and start selling more expensive equity (soon coming to a prospectus near you), also funded by taxpayers' money flows into the market. If the administration is truly aware of all these events (and if Zero Hedge knows about it, it is safe to say Tim Geithner also got the memo), then the potential fallout would be staggering once this information makes the light of day.

And the conspiracy thickens.

Thanks to an intrepid reader who pointed this out, a month ago ISDA published an amended close out protocol. This protocol would allow non-market close outs, i.e. CDS trade crosses that were not alligned with market bid/offers.

The purpose of the Protocol is to permit parties to agree upfront that in the event of a counterparty default, they will use Close-Out Amount valuation methodology to value trades. Close-Out Amount valuation, which was introduced in the 2002 ISDA Master Agreement, differs from the Market Quotation approach in that it allows participants more flexibility in valuation where market quotations may be difficult to obtain.

Of course ISDA made it seem that it was doing a favor to industry participants, very likely dictating under the gun.

Industry participants observed the significant benefits of the Close-Out Amount approach following the default of Lehman Brothers. In launching the Close-Out Amount Protocol, ISDA is facilitating amendment of existing 1992 ISDA Master Agreements by replacing Market Quotation and, if elected, Loss with the Close-Out Amount approach.

"This is yet another example of ISDA helping the industry to coalesce around more efficient and effective practices, while maintaining flexibility," said Robert Pickel, Executive Director and Chief Executive Officer, ISDA. "The Protocol permits parties to value trades in the way that is most appropriate, which greatly enhances smooth functioning of the market in testing circumstances."

And, lo and behold, on the list of adhering parties, AIG takes front and center stage (together with several other parties that probably deserve the microscope treatment).
So - in simple terms, ISDA, which is the only effective supervisor of the Over The Counter CDS market, is giving its blessing for trades to occur (cross) below where there is a realistic market bid, or higher than the offer. In traditional equity markets this is a highly illegal practice. ISDA is allowing retrospective arbitrary trades to have occurred at whatever price any two parties agree on, so long as the very vague necessary and sufficient condition of "market quotations may be difficult to obtain" is met. As anyone who follows CDS trading knows, this can be extrapolated to virtually any specific single-name, index or structured product easily. In essence ISDA gave its blessing for below the radar fund transfers of questionable legality. The curious timing of this decision and the alleged abuse of CDS transaction marks by and among AIG and the big banks, is striking to say the least.

This wholesale manipulation of markets, investors and taxpayers has gone on long enough.

[gwynedd1]

Re: Another Day, Another Bank Beats Estimates...

The revenue from my ocean front real estate properties in Switzerland and Austria also increased in Q1 with $200 mil dollars. If anyone wants to buy high value ocean front properties in Switzerland and Austria please send me a pm. I wouldn't depart from such good investments but I need cash for a killer deal (I'm going to buy the Eiffel Tower for a very good price and sell it as scrap iron )

Hi hashman,

I went to the time share promotion. They stand behind it. I got a free hotel room in Norlisk on any garden view suite on Tuesdays between December and February.

[c1ue]

Re: Another Day, Another Bank Beats Estimates...

C results:

$1.6B net income - modified by $2.6B in various payments to preferred stock holders. Actual net income -$1.0B

This is even with a resurgence of Institutional Client revenues to $7.2B (minus $2.2B writeoffs) - nearly as good as the Q1 2007 division revenues of $8.9B. And we all know what a hot M & A market the last quarter was.

Oh, plus a $1B gain from sale of credit card company Redecard shares.

More details in the 'C reports a profit' post