JPMorgan Chase Reports Third-Quarter 2011 Net Income of $4.3 Billion

October 13, 2011 06:58 AM Eastern Daylight Time 

$1.02 Per Share, on Revenue¹ of $24.4 Billion

NEW YORK--(BUSINESS WIRE)--JPMorgan Chase & Co. (NYSE: JPM):

• Challenging investment banking and capital markets environment; Firm maintained its #1 ranking for Global Investment Banking Fees year-to-date
• Consumer & Business Banking reported solid revenue, up 6% compared with prior year, and deposits up 7%; added 60 new branches during the quarter
• Credit Card sales volume² up 10%; net charge-offs declined as expected
• Commercial Banking reported solid revenue, with strong loan growth, up 9%, and record deposit² balances, up 31%
• Treasury & Securities Services reported strong growth in deposit² balances, up 41%
• Third-quarter results included the following significant items:^(*)
  • $1.9 billion pretax ($0.29 per share after-tax) benefit from debit valuation adjustment (“DVA”) gains in the Investment Bank, resulting from widening of the Firm’s credit spreads
  • $542 million pretax ($0.09 per share after-tax) Private Equity loss
  • $1.0 billion pretax ($0.15 per share after-tax) additional litigation expense, predominantly for mortgage-related matters, in Corporate
• Fortress balance sheet maintained:
  • Basel I Tier 1 Common¹ of $120 billion, ratio of 9.9%; estimated Basel III Tier 1 Common¹ ratio of 7.7%
  • Repurchased $4.4 billion of common stock² during the third quarter
  • Credit reserves at $29.0 billion; loan loss coverage ratio 3.74% of total loans¹
• Over $1.3 trillion in new and renewed credit provided to and capital raised for consumers, corporations, small businesses, municipalities and not-for-profits year-to-date:
  • Small business loan originations of $12.6 billion, up 71% compared with prior year-to-date and 133% compared with the same period in 2009
  • Middle-market loans of $41.5 billion, up 18% compared with prior year
  • Trade finance loans of $30.1 billion, up 69% compared with prior year
• Increased U.S. employee headcount year-to-date by more than 13,200; over 2,200 military veteran hires year-to-date

1		Presented on a managed basis. For notes on managed basis and other non-GAAP measures, see page 13.
2		For additional notes on financial measures, see pages 13 and 14.
(*)		The Firm also recognized a $691 million pretax net loss ($0.11 per share after-tax), including hedges, from credit valuation adjustments ("CVA") on derivative assets, due to the widening of credit spreads for the Firm's counterparties. The Firm actively manages its exposure to CVA.

JPMorgan Chase & Co. (NYSE: JPM) today reported third-quarter 2011 net income of $4.3 billion, compared with net income of $4.4 billion in the third quarter of 2010. Earnings per share were $1.02, compared with $1.01 in the third quarter of 2010.

Jamie Dimon, Chairman and Chief Executive Officer, commented: “The Firm reported third-quarter net income of $4.3 billion, representing a 13% return on tangible common equity¹. It is notable that these results included several significant items^(*), including a $542 million pretax loss in Private Equity, $1.0 billion pretax of additional litigation expense in Corporate and a $1.9 billion pretax DVA gain. The DVA gain reflects an adjustment for the widening of the Firm’s credit spreads which could reverse in future periods and does not relate to the underlying operations of the company. All things considered, we believe the Firm’s returns were reasonable given the current environment.”

Further commenting on business results, Dimon said: “The Investment Bank’s revenue, excluding the DVA gain, was down substantially; however, we are gratified that the business maintained its #1 ranking in Global Investment Banking Fees, and we believe that we have maintained a healthy share of the global sales and trading market. Retail Financial Services demonstrated good underlying performance, with solid revenue and increased deposits in Consumer & Business Banking and strong retail mortgage origination volumes in our Mortgage Banking business. In our Card business, credit card sales volume, excluding Commercial Card, was up 10% compared with the prior year. Commercial Banking reported continued loan growth, including middle-market loan balances up 18% compared with the prior year, and record deposit² balances of $180.3 billion were up 31% compared with the prior year. In Treasury & Securities Services, trade finance loans increased 69% to $30.1 billion, and deposit² balances increased 41% to $341.1 billion. Corporate/Private Equity results were negatively affected by market conditions, the Firm’s decision to take certain positions in its securities portfolio in anticipation of an eventual increase in interest rates, and additional litigation expense.”

Dimon continued: “Mortgage net charge-offs improved slightly but remained at extremely high levels. We expect mortgage credit losses to remain elevated. The Firm remains committed to helping homeowners and preventing foreclosures. Since the beginning of 2009, we have offered 1,224,000 trial modifications to struggling homeowners. With respect to our Chase credit card portfolio, the net charge-off rate¹improved to 4.34% and may continue to improve modestly over the next quarter or so. After that we currently would not expect much improvement. Wholesale credit trends remained healthy and stable.”

Regarding the balance sheet, Dimon commented: “We maintained our fortress balance sheet, ending the third quarter with a Basel I Tier 1 Common ratio of 9.9%. Our strong capital position allowed us to repurchase $4.4 billion of common stock² during the third quarter. We estimate that our Basel III Tier 1 Common ratio was approximately 7.7% at the end of the third quarter. Our total firmwide credit reserves remained relatively flat compared with the prior quarter at $29.0 billion, resulting in a firmwide coverage ratio of 3.74% of total loans¹. The Firm’s total deposits increased to $1.1 trillion, up 21% compared with the prior year.”

Dimon also remarked: “JPMorgan Chase continues to do our part to support our clients and communities. During the first nine months of 2011, the Firm provided credit to and raised capital of over $1.3 trillion for our clients, up 22% compared with the same period last year; this included $12.6 billion lent to small businesses, up 71%. We originated more than 560,000 mortgages; we provided credit cards to approximately 6.6 million people; and we lent or provided credit of $51.0 billion to more than 1,100 not-for-profit and government entities, including states, municipalities, hospitals, and universities. In addition, the Firm has been very successful in hiring more than 2,200 U.S. military veterans so far this year and has increased its net employee headcount in the U.S. by more than 13,200.”

Dimon concluded: “Our shareholders should rest assured that we are being extremely cautious while navigating through this challenging economic environment. We are working hard to meet all of the requirements of the new and complex regulatory environment, and we continue to invest in the future while remaining focused on serving our clients and communities around the world.”

(*)

The Firm also recognized a $691 million pretax net loss ($0.11 per share after-tax), including hedges, from credit valuation adjustments ("CVA") on derivative assets, due to the widening of credit spreads for the Firm's counterparties. The Firm actively manages its exposure to CVA.