Posts Tagged ‘JP Morgan

04
Aug
10

MasterCard 2Q profit jumps 31 percent, tops view

NEWS
MasterCard 2Q profit jumps 31 percent, tops view

Wednesday, August 04, 2010

••• Anaemic consumer spending in the U.S. was offset by strong international growth to help boost MasterCard Inc’s second-quarter profit by 31 percent.

The gain topped Wall Street profit expectations, but fell short of the 38 percent leap in operating income posted by the company’s larger rival, Visa Inc., last week.

MasterCard shares slipped $1.76, to $200.70 in midday trading as the broader market sputtered.

MasterCard’s gains showed the Purchase, NY-based payment processor’s reliance on overseas use of its cards and networks. Worldwide purchasing volume rose eight per cent, while U.S. purchasing volume eked out a gain of less than 1 percent.

Worldwide, credit card use rose 10 percent, while debit card use leaped 29 percent.

Chief Financial Officer Martina Hund-Mejean said in an interview that card use was particularly strong in Latin America and Asia Pacific, which both saw double-digit growth rates.

‘Even in Europe,’ she said, alluding to the economic turmoil on the Continent in recent months. ‘We do not see any significant impact on our numbers in terms of the Europeans not spending.’

U.S. credit card use edged down 1.5 percent, continuing a two-year decline, but showing the smallest drop since the third quarter of 2008.

Debit card use edged up less than 1 percent. That reflects more frequent use of debit cards, but was held down by MasterCard’s loss of several debit card deals with banks, most notably the former Washington Mutual, which was bought by JPMorgan Chase in 2008. Hund-Mejean said US debit growth was closer to 20 percent if the banks winding down their MasterCard programs are stripped out.

U.S. spending, particularly with credit cards, picked up in April but was less robust later in the quarter, Hund-Mejean said. ‘People still feel a little careful and cautious, and I think that’s what we saw in May and June,’ she said.

Analysts noted the growth compared with a weak quarter last year. Thomas McCrohan from Janney Capital Marketssaid it is hard to read into the results to say whether they indicate any real improvement in the economy. But there was ‘nothing alarming’ in the results.

‘There’s nothing that would support a double dip’ of the recession, McCrohan said.

The number of transactions MasterCard handled was basically flat at 5.6 billion. Cross-border volume jumped 15.2 percent.

Net income rose to $458 million, or $3.49 per share, compared with $349 million, or $2.67 per share, a year ago.

Revenue rose 7 percent to $1.37 billion from $1.28 billion in the 2009 second quarter. MasterCard said the revenue increase reflected the higher cross-border volumes, higher gross dollar volume of the transactions it processed and the impact of price increases of 4 percent.

Wall Street expected earnings of $3.33 per share on revenue of $1.38 billion.

Total operating expences dropped 10 percent to $648 million. The decrease was led by a drop in severance and compensation costs as a result of layoffs in 2009.

President and CEO Ajay Banga said it is too early to tell what results MasterCard will feel from the limits on debit card fees included in the financial overhaul bill signed by President Barack Obama last month.

‘I know that everybody is eager to fully understand the impact on our business, but the truth is we just have to wait for the (Federal Reserve) to develop the regulations, and for our customers to react, before we will know the full implications both for the industry and for our company,’ he said during a conference call.

Banga noted there are a number of options for implementing the new rules, and quipped that MasterCard benefits in this case from having a smaller market share of U.S. debit than Visa.

Regardless of the new regulations, Banga said he doesn’t see the shift from cash and checks to electronic payments slowing down. He spoke enthusiastically about a number of pilot projects and overseas ventures MasterCard has to expand its network beyond card payments. Deals the company struck on mobile payments in Latin America, money transfer services in China and contactless payments in the U.S. position MasterCard for continued growth as the payments market evolves, he said.

David Parker, an analyst with Lazard Capital Markets, said it will be a few years before ‘electronic wallets’ are a reality, and there are some challenges in terms of customer and merchant adoption, but it is clear the market is moving in that direction.

MasterCard’s investments in this area could help it overcome its disadvantage in debit cards.

‘I think there is an opportunity there with mobile commerce,’ he said.
• Latest News & Headlines » Home «
Share

20
Jun
10

BP chief escapes oil spill for Cowes yacht race

NEWS
BP chief escapes oil spill for Cowes yacht race

Sunday, June 20, 2010

In what one environmentalist has described as ‘yet another public relations disaster’ for embattled energy giant BP, CEO Tony Hayward has taken time off to attend a glitzy yacht race around England’s Isle of Wight.
As social networking sites like Twitter and Facebook lit up with outrage, BP spokespeople rushed to defend Hayward, who has drawn withering criticism as the public face of BP’s halting efforts to stop the worst oil spill in U.S. history.
Spokeswoman Sheila Williams said Hayward took a break from overseeing BP efforts to stem the undersea gusher in Gulf of Mexico so he could watch his boat ‘Bob’ participate in the J P Morgan Asset Management Round the Island Race on Saturday. The 16-metre yacht was made by the Annapolis, Maryland-based boat builder Farr Yacht Design.

The annual one-day race is one of the world’s largest, attracting more than 1700 boats and 16,000 sailors as world-renowned yachtsmen compete with wealthy amateurs in the 50-nautical mile course around the island.
• Latest News & Headlines » Home «
• Source(s): British Petroleum PLC and Sky News / BSkyB / News Corporation
Share

29
Apr
10

Protesters enter NYC bank buildings before rally

NEWS
Protesters enter NYC bank buildings before rally

Thursday, April 29, 2010

Noisy protesters with signs took over three bank building lobbies on Thursday in a prelude to a Wall Street rally by workers and union leaders angry over lost jobs, the taxpayer-funded bailout of financial institutions and questionable lending practices by big banks.

Hours before the scheduled rally, more than 100 people entered a midtown Manhattan building housing JPMorgan Chase offices. They handed a bank executive a letter requesting a meeting with the CEO, and chanted ‘Bust up big banks!’ and ‘People power!’
A half-hour later, they were calmly escorted outside by officers, who remained expressionless as the protesters chanted, ‘The police need a raise.’

They then walked a few blocks down Park Avenue and crowded into a Wells Fargo and Wachovia building lobby. Police arrived on horseback as curious office workers watched the scene unfold from their windows.
‘We’re here today to stop the corporate greed that is ruining our neighbourhoods,’ said Andrea Goldman, 59, who’s part of a group called Alliance to Develop Power.

Sign slogans included: ‘Save Our Jobs’ and ‘Save Our Homes’.

The banks did not immediately respond to requests for comment.

Thousands of workers and union members were expected at the rally, organised by the AFL-CIO, the largest federation of North American labour unions, and an association of community groups.

The Securities Industry and Financial Markets Association, which includes many Wall Street financial institutions, declined to comment.

Share

17
Apr
10

SEC tries to ride Goldman Sachs Group back to credibility

NEWS
SEC tries to ride Goldman Sachs Group back to credibility

Saturday, April 17, 2010

Financial shares led the stock market sharply lower after federal regulators filed civil fraud charges against Goldman Sachs over its dealings in subprime mortgages.

The Dow Jones industrial average lost about 125 points, having been down as much as 170 points. At times, it fell below 11,000 after closing above that level on Monday for the first time in more than a year and a half.

Analysts say the market was poised to fall after a steady run of gains the past two months, and the Goldman Sachs news gave investors a reason to sell and take some profits.

“Basically it’s sell, and ask questions later,” said Quincy Krosby, market strategist at Prudential Financial. “A market that wants to sell off will find an excuse.”

Stocks were already lower before news of the Securities and Exchange Commission’s charges against the leading investment bank. Investors were disappointed after Google reported earnings that didn’t live up to forecasts.

General Electric Co. and Bank of America Corp. also reported profits that topped forecasts, but their stocks still fell. GE’s revenue came up short of expectations, while Bank of America said loan losses remain high.

The SEC charged Goldman and one of its vice presidents with failing to disclose key information to investors regarding complex mortgage-backed securities.

“It’s all a knee-jerk reaction to Goldman,” said Steven Goldman, chief market strategist at Weeden & Co., referring to the market’s drop. He said the fundamentals of the market have not changed.

The charges come as the Obama administration seeks greater regulation of America’s banks and their trading of exotic securities like those involved in the Goldman case. These kinds of investments are widely seen as one of the triggers of the financial crisis that crippled the nation’s financial system in the (northern) autumn of 2008.

“Road blocks for financial regulation have taken a hit today,” said Thomas Villalta, co-portfolio manager of the Jones Villalta Opportunity Fund.

Analysts say other banks that also traded these types of securities will be closely scrutinised. That means the financial industry could continue to struggle because of uncertainty about reform and other potential investigations.

Investors looked past economic news. The Commerce Department said housing construction rose to a 16-month high in March. However, construction of single-family homes, the most important segment of the market, fell.

Economists are also concerned about continued hurdles in the housing market, like rising mortgage rates and the end this month of a homebuyer tax credit. A separate report showed consumer sentiment fell this month.

Friday’s drop comes after six straight days of gains that pushed the Dow to its highest close in more than 18 months. Stocks have been steadily rising in recent months on growing signs that the economy is recovering, albeit slowly.

The Dow Jones Industrial Average fell 127.34 points or 1.14 per cent, to 11,017.23 points.

The tech-rich Nasdaq composite slipped 33.98 points or 1.35 per cent, to 2,481.71 and the broad-market Standard Poor’s 500 index dipped 18.54 points or 1.53 per cent, to 1,193.13.

After mixed early trades, the SEC announcement, and its refusal to rule out further charges across the financial sector, sent shares in some of Wall Streets biggest firms deep into negative territory.

Goldman stocks were over 10 per cent down, slicing $20 off each share. They were followed by Bank of America, JP Morgan and Morgan Stanley, whose stocks were between three and five per cent off.

Trading had got off to a subdued start despite larger-than-forecasted increases in housing starts and building permits in March, as well as favourable earnings reports from Bank of America and General Electric.

Share

14
Apr
10

JP Morgan profits boost bank shares

NEWS
JP Morgan profits boost bank shares

Wednesday, April 14, 2010

The sprawling U.S. banking empire JP Morgan has delivered a stark illustration of the American economy’s two-tier recovery by chalking up vast profits from trading on Wall Street while suffering losses on the high street as millions of recession-hit customers struggle to repay mortgages and credit card loans.

Smashing analysts’ forecasts, JP Morgan enjoyed a 55 percent surge in first-quarter profits to $3.3 billion compared with a year earlier, setting a tough target for rivals such as Goldman Sachs, Morgan Stanley and Citigroup, which will report earnings over the next week. The firm’s shares climbed nearly 3 percent during early trading in New York.

But the bank’s figures clearly demonstrated the uneven nature of America’s gradual return to economic prosperity. While JP Morgan’s investment banking division produced a $2.4 billion profit, the firm’s retail financial services operation suffered a $131 million loss and its card services arm lost $303 million. Chief executive Jamie Dimon placed the credit for the bank’s overall profitability squarely with investment banking staff in New York, London and other financial capitals: “Our traders did a good job,” he said.

The upward march of stock markets on both sides of the Atlantic, together with a thaw in credit markets and a revival in corporate deal-making, has helped investment banks return swiftly to near-record levels of profitability, holding out the promise of more multimillion-dollar bonuses for star employees.
On the high street, Dimon said there were indications of a modest improvement in business, with credit trends “starting to look hopeful”, aided by a recent fall in U.S. unemployment: “When unemployment stops going up, you start to see an improvement in these things.”

He added that the chances of a “double dip” downturn opening up a fresh chapter in the recession appeared to be “rapidly going away”.

The patchy nature of recovery has led analysts to predict that a large chunk of the banking industry will remain in the red for some time to come. In a recent research note, Barclays Capital forecasts that 10 of America’s 25 leading banks will reveal a first-quarter loss as middle-ranking institutions without a Wall Street presence continue to struggle.

Wary of public outrage over a tiny elite accelerating to recovery ahead of the rest, the Obama administration has proposed a fee on banks to recoup bailout funds. Speaking on a conference call, Dimon, who was paid $17 million last year, took a swipe at this: “Let’s all not call it a bank fee and call it what it is: a punitive bank tax.”

A broader package of financial regulatory reform is mired in Congressional wrangling, with Republicans in the Senate objecting to plans for a ban on banks’ proprietary trading. Meeting congressional leaders today, President Obama urged enactment of plans for greater transparency in derivatives trading and told Republicans that the bill would help future bailouts of firms considered “too big to fail”.

In an industry that has seen its public reputation collapse, JP Morgan is among the few banks to emerge from the credit crunch in a position of enhanced strength. With relatively few toxic liabilities on its balance sheet, the firm was able to snap up the valuable assets of defunct rivals, picking up the remnants of Bear Stearns and Washington Mutual.

Problems have emerged, however, at some of these operations. JP Morgan has inherited a mortgage book of distinctly dubious quality from Seattle-based Washington Mutual, which collapsed in September 2008 in the largest commercial banking failure in U.S. history. The bank revealed it was setting aside $2.3 billion to cover litigation largely related to fraudulent or predatory mortgage lending.

JP Morgan’s earnings won praise from industry watchers. In a research note, Matt Albrecht, an equity analyst at Standard & Poor’s, highlighted a drop in the bank’s provision against bad debt: “Delinquency rates have stabilised or improved across most businesses, suggesting further reductions in loan loss provisions.”

Matt McCormick at Bahl & Gaynor in Cincinnati said JP Morgan was a bellwether for the financial sector: “Anyone who does not come in with similar results will suffer the consequences in the market.”

Share




Calendar

September 2019
M T W T F S S
« Aug    
 1
2345678
9101112131415
16171819202122
23242526272829
30  

Archives

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 2 other followers

© Copyright 2010 Dominic Stoughton. All Rights reserved.

Dominic Stoughton's Blog