J.P. Morgan Chase & Co. posted a 53% decline in second-quarter net income as credit-loss provisions more than doubled and its investment bank cut the value of leveraged-loan and mortgage-related securities by a further $1.1 billion.
The nation's biggest bank by market value, which has been battered less than others by the credit crisis, reported net income of $2 billion, or 54 cents a share, compared with $4.23 billion, or $1.24 a share, a year earlier. Net revenue fell 3% to $18.4 billion. Analysts polled by Thomson Reuters had expected earnings of 44 cents a share on revenue of $16.55 billion. Shares rose 4.1% in premarket trading.
Chief Executive Jamie Dimon said he expects "the economic environment to continue to be weak -- and to likely get weaker -- and for the capital markets to remain under stress." He added that "since substantial risks still remain on our balance sheet, these factors will likely affect our business for the remainder of the year or longer."
What to expect from other major companies -- including analyst forecasts for profit and revenue -- as they report quarterly earnings
The latest results included a $540 million loss related to the company's purchase of Bear Stearns Cos. In mid-May, Mr. Dimon said J.P. Morgan's $1.08 billion purchase of Bear would reduce J.P. Morgan's quarterly earnings by $500 million, plus or minus several hundred million dollars, due to its share of Bear's losses and merger costs.
Mr. Dimon noted Thursday that "through the truly remarkable partnership and efforts of our people in extremely difficult times, we made great progress towards full integration, while also significantly reducing our combined risk positions. We now have an expanded platform to better serve our institutional clients -- one which we fully expect will make our franchise stronger over time."
The bank's return on equity -- an important measure of profitability at financial firms -- fell to 6% from 14%, and credit-loss provisions more than doubled to $3.45 billion but fell 22% from the first quarter. Home-equity charge-offs surged to 2.16% from 0.44%, while subprime-mortgage charge-offs quadrupled. Charge-offs for prime mortgages surged to 0.91% from 0.05%.
The company's investment bank saw profit plunge 67% amid the markdowns as revenue fell 5.7%. Its retail-bank operations saw earnings fall 23% on the surging credit-loss provisions, as revenue increased 15%.
The provisions also hurt the credit-card business, where earnings slumped 67% amid a 2% revenue drop. The charge-off rate surged to 4.98% from 3.62% a year earlier and 4.37% in the first quarter. At an investor conference in May, Mr. Dimon said the firm expected the quarter's losses to be about 5%, exceed that level in the second half of the year and possibly average 6% in 2009.
Thursday, July 17, 2008
India sees good harvest
India expects a good harvest of rice, corn and soybean this year, and may release 6 million tonnes of wheat into the local market to further ease prices, farm minister Sharad Pawar said, raising hopes export curbs may be relaxed.
Pawar told reporters that India had seen adequate and well-distributed monsoon rains, adding government incentives encouraging farmers to use fertilisers would boost farm output.
India had to import wheat in each of the past two years, and this year it clamped down on rice and corn exports and cut import duties on edible oils as part of efforts to tame inflation that hit a 13-year high of 11.89 percent in end-June.
"We are hopeful of a rich harvest, especially of rice, maize and soybean," Pawar told a conference.
The weather office said in a statement monsoon rains were 6 percent above normal so far but the distritution was uneven. Rainfall was 77 percent above normal in the northwest but 34 percent below the long-term average in southern India.
Pawar said the government would take a decision on selling wheat in the domestic market by Thursday.
"We are planning open-market sales of six million tonnes of wheat," Pawar told reporters. He said prices of the grain were rising in some parts of the country.
Traders said pricing of the grain would determine the impact.
"They will have to sell below their economic cost ... The government has procured at higher levels and incurred the cost of holding and transporting grains," a New Dehi-based trader said.
A trader in Singapore said the move to sell wheat in the open market signalled a good harvest.
"Some quantities might make it to the international market. There is surplus production for both wheat and corn, I hope India resumes exports," he said. India's government bought a record 22.5 million tonnes of wheat from farmers this year, filling its granaries and easing concerns of scarcity.
Pawar said India was likely to buy 27.5 million tonnes of rice from farmers by the end of the crop year to September.
The country has banned exports of non-basmati rice and the government has said in the past that it would review the ban only by November, after assessing the new harvest.
Pawar said India was also sending half a million tonnes of rice to Africa as promised by Prime Minister Manmohan Singh at the recent G-8 summit.
The country has also shipped 186,305 tonnes of rice to neighbouring Bangladesh, part of the 500,000 tonnes it had offered Dhaka after the country was ravaged by a cyclone last November.
Pawar told reporters that India had seen adequate and well-distributed monsoon rains, adding government incentives encouraging farmers to use fertilisers would boost farm output.
India had to import wheat in each of the past two years, and this year it clamped down on rice and corn exports and cut import duties on edible oils as part of efforts to tame inflation that hit a 13-year high of 11.89 percent in end-June.
"We are hopeful of a rich harvest, especially of rice, maize and soybean," Pawar told a conference.
The weather office said in a statement monsoon rains were 6 percent above normal so far but the distritution was uneven. Rainfall was 77 percent above normal in the northwest but 34 percent below the long-term average in southern India.
Pawar said the government would take a decision on selling wheat in the domestic market by Thursday.
"We are planning open-market sales of six million tonnes of wheat," Pawar told reporters. He said prices of the grain were rising in some parts of the country.
Traders said pricing of the grain would determine the impact.
"They will have to sell below their economic cost ... The government has procured at higher levels and incurred the cost of holding and transporting grains," a New Dehi-based trader said.
A trader in Singapore said the move to sell wheat in the open market signalled a good harvest.
"Some quantities might make it to the international market. There is surplus production for both wheat and corn, I hope India resumes exports," he said. India's government bought a record 22.5 million tonnes of wheat from farmers this year, filling its granaries and easing concerns of scarcity.
Pawar said India was likely to buy 27.5 million tonnes of rice from farmers by the end of the crop year to September.
The country has banned exports of non-basmati rice and the government has said in the past that it would review the ban only by November, after assessing the new harvest.
Pawar said India was also sending half a million tonnes of rice to Africa as promised by Prime Minister Manmohan Singh at the recent G-8 summit.
The country has also shipped 186,305 tonnes of rice to neighbouring Bangladesh, part of the 500,000 tonnes it had offered Dhaka after the country was ravaged by a cyclone last November.
Chidambaram says pressure on prices remains
India's finance minister, Palaniappan Chidambaram, said on Thursday pressure on prices remained but there were signs that central bank moves to tighten policy and lower inflation were working.
"There are signs that monetary steps are taking effect," Chidambaram told reporters. He added the government could take more measures and that the central bank's assessment on inflation was "fair and correct".
India's annual wholesale price inflation rate surged to nearly 12 percent in June, its highest in at least 13 years.
"There are signs that monetary steps are taking effect," Chidambaram told reporters. He added the government could take more measures and that the central bank's assessment on inflation was "fair and correct".
India's annual wholesale price inflation rate surged to nearly 12 percent in June, its highest in at least 13 years.
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