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JP Morgan reported their latest quarter's results. The numbers beat expectations both for revenues and profits. Profits were around $360 million higher than analysts were expecting. Driving their strong results was their advisory business and the trading desk. During these volatile times, the trading business just prints money as clients rush into the market and other clients rush out.
The standout number for these results, was the significantly lower bad-loan provisions than analysts were expecting. The expectation was for a provision of $2.3 billion, but JP Morgan only put aside $611 million. This was a similar case with Citibank, who also reported numbers yesterday.
The strong beat, coupled with the lower provisions meant that the share price had a good start to the trading day. Unfortunately, as the investor call progressed, the stock started to sag. The reason was because management said the lower than expected provisions was due to the massive provisions in the previous quarters, and not because JP Morgan was expecting a significant improvement in outstanding loans.
Most Vestact stocks have done really well this year, as the world moves to being more technology-focused and doing more things online. JP Morgan though is down around 25%. The combination of lower interest rates and the potential for large bad-debts has been a drag on investor sentiment. It is a stock that we are keeping a close eye on and if we feel you should get out, we will contact Vestact clients directly.
