JPM Earnings: 'Solid But Not Exciting'

JP Morgan up over 1 percent pre-open, reported earnings of $1.28, 12 cents better than consensus and a 72 percent improvement over the $0.64 reported for the same period last year. Revenues of $25.22 billion were in-line with expectations.

The positives:

1) credit continued to improve, as they released a lot of loan loss reserves that were being held to cover bad loans. I mean a lot: a $2 billion reduction in credit card allowance, which helped improve earnings by $0.29, according to analysts. Non-performing assets also continued to decline.

2) Trading revenue was down only 4 percent year-over-year, better than expected and good for companies like Goldman Sachs that have big trading operations.

The negatives:

1) no loan growth, except in the commercial area (interest income from loans is still over one-third of their revenues)

2) no real revenue growth.

Bottom line: credit keeps getting better, and that's a big help, but what the banks really need is stable economic growth.

One analyst described the results as "Solid but Not Exciting." Still, it may be good enough for the moment, as most banks are trading up fractionally in the pre-open.


1) Slower global growth or just bad weather? Aussie miner Rio Tinto (blamed poor weather (cyclones and monsoons) in Australia for weaker Q1 production. In the quarter, output fell in iron ore (down 3 percent), copper (down 14 percent), alumina (down 4 percent), and coking coal (down 12 percent). But shares are up fractionally as the company eased some concerns, saying that looking ahead, higher iron ore, coking coal, and aluminum production this year would likely help offset weaker copper output on the year.

2) After rising substantially over the past couple of days on takeover chatter, Tyco International falls 3 percent after France's Schneider Electric shot down earlier rumors that it was evaluating a bid for the U.S. security systems provider. That came after a couple of newspapers overnight reported that a Schneider Electric was prepared to make a $30 billion offer.

3) Nokia rises 1 percent despite being downgraded to underweight at Morgan Stanley. The brokerage believes there's a 10% chance the handset maker's 2011 earnings could disappoint because of a greater slowdown in sales, higher component costs, and an underwhelming array of key product launches.

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