JPMorgan handily beat profit and revenue expectations for the first quarter Wednesday, with strength coming from investment banking and fixed-income trading. What does this mean for other bank earnings going forward? Jeffery Harte, managing director of equity research at Sandler O’Neill, shared his insights.
“It looks like a revenue-related beat driven by market and trading revenues,” Harte told CNBC. “Specifically, the fixed income trading number was quite a bit better than expected.”
With improving economic and credit trends, Harte expects JPMorgan to start hiking its dividend in the second half of the year.
“Maybe not all the way up to the mid-30 percent payout rate we’re looking for, but maybe halfway there,” he said.
Additionally, Harte noted that delinquency rates have been declining.
“Not only for JPMorgan, but it’s been declining for the industry,” he said. “As long as that continues—that’s the leading indicator—and as long as that keeps going down, that’s going to be good news for JPMorgan and bank stocks in general.”
- Watch Harte's Previous Appearance on CNBC (Mar. 11, 2010)
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JPMorgan's Peers/Rivals:
Goldman Sachs
Citigroup
Bank of America
Morgan Stanley
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Disclosures:
No immediate information was available for Harte or his firm.
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