JPMorgan reports QE June 2012 financial results on Friday, July 13, before market open
Last quarter, I reluctantly gave the devil his due and stated CEO Jamie Dimon and accomplices had not only rebounded big-time in Q1 2012 but the financial deterioration had halted. Then Dimon, now in close competition with Goldman Sachs CEO Lloyd Blankfein and Barclays CEO Robert Diamond as the World’s Most Hated and Corrupt Banker, proves the rot at the top had permeated downwards in the organization chart. The now famous London Whale et al. trading losses have been estimated at $2 billion to $9 billion.
Numerous other regulatory investigations are underway regarding the illicit activities at this $2+ trillion American taxpayer-guaranteed criminal enterprise. Even the Federal Energy Regulatory Commission (FERC) is looking into energy price-fixing which defrauded consumers! I did caution last quarter, “Just remember, as you have read in many financial disclaimers, past performance is not a predictor or indicator of future performance”. I normally don’t say this but had obvious wariness, disdain, and distrust of Dimon. Little did I realize at the time that Dimon Criminal Enterprises was so pervasive at JPMorgan Chase & Co.
The banking business is a component, but not all of JPMorgan, no matter how much management talks about banking. About 30% of total assets are net loans and 36% are trading assets and investment securities. Cash, cash equivalents, securities, and trading assets combined are 60% of total assets. Ultimately that leaves 10% in non-earning assets such as goodwill and buildings.
Standard Jamie Dimon Criminal Enterprises Disclosure and Warning: Keep in mind when trading JPM stock, you are trading their traders for a portion of the quarterly earnings per share lotto. Additional risk includes the efficiency and stealth of the ongoing criminal operations. Improper risk management (trading losses) plus insufficient lobbying of and contributions to (bribing) of politicians could adversely affect financial performance and JPM stock price.
Even if a worst-case scenario trading loss upwards to $9 billion should be realized, this is still financially manageable. Total equity at 3-31-12 was $189 billion with a capital ratio of 8.18%. Deduct the entire $9 billion and the capital ratio is still an adequate 7.79%. Solvency is not an immediate concern although the capital ratio needs to stay above 7%.
At 3-31-12, I had rated JPMorgan a “D” on a scale of A+ to G-. The median rating is “D” and the average rating was “C”. Financial position strength is weighted more than financial performance. The bank ratings review is here .
For Q2 2012, analysts’ EPS estimates are in a wide range which reflects the uncertainty about JPM. Earnings per share projections are a -20% to -86% drop QoQ and a -17% to -85% drop YoY. The average is -40% QoQ and -38% YoY. Be prepared for a wild ride.
Estimated QE June 2012 Earnings per Share
Yahoo Finance Estimates: $0.79 avg, $0.19 low, $1.05 high, 29 analysts
Prior Quarter: $1.31
Prior Year: $1.27
Outlook: none provided
Prior Quarterly Review: JPMorgan Earnings Rebound to Near-Record Levels, Deterioration Halted
JPMorgan Income Statement Q1 2012 Financial performance significantly improved QoQ, was flat YoY, and is respectable. Net Revenues were a very strong $26.71 billion, Net Income was a near-record $5.38 billion, and Earnings Per Share was a multi-year, if not all-time, high of $1.31. For QoQ, these were +24%, +44%, and +46%, respectively. For YoY, these were +6%, -3%, and +2%, respectively. Both the Operating Margin of 29% and Net Margin of 20% popped to 3-quarter highs. The operating expense ratio of 62% increased QoQ and YoY to a multi-year, if not all-time, high and is almost out of control.
JPMorgan Balance Sheet Q1 2012 JPMorgan’s “fortress balance sheet” is now $2.32 trillion in total assets. Overall financial position is adequate and stable, that is, not much change QoQ and YoY. The capital ratio of 8.18% is lower than desirable, but adequate, as are the Tier 1 Capital and Tier 1 Common ratios. Return on assets is a respectable +0.83%.
I nominate CEO Jamie Dimon’s statement in the earnings press release as some of the greatest fascist propaganda ever written: “JPMorgan Chase positively impacts the lives of millions of people and the communities in which they live. We are serving them each day, putting our resources and our voices to work on their behalf”. This would be second place, only to Goldman Sachs CEO Lloyd Blankfein saying, “I’m doing God’s work”.
Largest USA Banks Ratings: Capital One & U.S. Bancorp Tops, Goldman Sachs Last
JPMorgan Earnings Rebound to Near-Record Levels, Deterioration Halted
