Randomly Noted

J.P. Morgan reported some strong earnings today. But what this bloggers eye were some of the sub-numbers in the earnings report. The bank booked $1.8 billion in investment banking fees. But don’t be fooled – that wasn’t from big M&A advising. But $429 million was in advisory fees. Instead, that $1.3 billion + remaining fees number came from equity and debt underwriting, with the big piece coming from debt – a quarterly record of $971 million for the bank.

Grouped under the investment bank is also trading – and fixed income once again ruled the day. Of the $6.6 billion of revenues from “fixed income/equities,” $5.23 billion came from fixed-income. The bank didn’t offer a break down i.e. how much was from FX trading, for example.

Finally, the investment bank (trading and traditional IB) contributed about 43% of the firms net income ($2.37 billion of a total $5.5 billion).

A quarter where the investment bank didn’t carry the whole day, er quarter, but carried a lot of it.

J.P. Morgan reported stronger than expected earnings today ($4.8 billion) in part because its bad loan portfolio wasn’t performing quite as badly as before. The chart to the left demonstrates how deliquency trends for J.P. in the subprime mortgage area have begun to not only level off but decline. The numbers remain high, but are at least headed in a better direction. It saw similar improvements in its home equity line portfolio of loans as well. Surprisingly, where there wasn’t a lot of improvement was in the prime mortgage portfolio (see chart below). Some other interesting trends in the earnings report worth noting: the bank continues hiring and is increasing staff. At the end of this quarter, it had 232,939 employees, up a little more than 6,000 from the 1st quarter of the year. At the end of last year’s second quarter, the bank had 220,255 employees on the payroll. Equity underwriting fees were down 68% and debt underwriting fees were down 6%.

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