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JPMorgan & Wells Fargo beat estimates

April 16, 2012

JPMorgan Chase (market close: -3.6%) earned $1.31 per share in the first quarter of 2012 (EPS consensus of 28 analysts in a Bloomberg survey: $1.17; Q4 2011 EPS: 90 cents; net income fell to $5.38 bn from a record $5.56 bn in the yearbefore period; investment bank unit: -29% year-over-year to $1.68 bn) on a 6% rise in revenue to $26.7 bn (investment bank: -11% y-o-y to $7.32 bn, +68% quarterover- quarter; revenue from fixed income and equity markets: -10% y-o-y, +83% q-o-q) as the leading US bank issued more mortgage loans.

Still, “we expect to see elevated levels of costs and losses associated with mortgage-related issues for a while longer,” chief executive Jamie Dimon warned. The company lifted its quarterly dividend to $0.30 per share and approved a new $15 bn stock buyback programme. Wells Fargo (-3.5%) saw Q1 net income jump 13% to a record $4.25 bn, or 75 cents per share (marking its ninth straight quarter of EPS growth, median analyst EPS forecast: 73 cents), as its loan portfolio continued to improve and credit loss provisions shrank 10% to $2 bn. Revenue grew 6.4% y-o-y to $21.6 bn, reaching the highest in nine quarters and also topped the market consensus of $20.4 bn. The nation’s biggest home mortgage lender hiked its dividend by 83% to 22 cents a share.