JP Morgan Leads Financial Sector in Earnings
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It’s an exciting day on the stock market — and for the financial sector. JP Morgan profits are in, an it appears that third quarter earnings are $3.6 billion. This is even better than a year ago, just before the global financial crisis really hit. As the first major bank to share its earnings, JP Morgan is setting the tone for expectation moving forward. There is hope that the financial sector is moving out of the woods. And, of course, the JP Morgan results underscores a difference in the way people on Wall Street view things versus the view on main street, reports MarketWatch:
“Economists and politicians have stated the market is turning, and while most Americans looking at double-digit unemployment figures aren’t ‘feeling the love,’ today’s announcement by J.P. Morgan Chase suggests that at least the business tide may be turning,” Aite Group analyst Denise Valentine wrote in a research note.
“We certainly expect year-over-year figures to improve, but beating analyst earnings projections by 30 cents a share is impressive,” she concluded.
But it isn’t all good news for JP Morgan. There are concerns about non-performing assets. These are loans that are more than 90 days past due. Apparently, JP Morgan has rather a large amount of these types of loans still on its balance sheet. Non-performing loans have double since last year’s report. This is probably due mainly to the fact that the slumping economy has resulted in job losses and other undesirable economic conditions for the borrowers that JP Morgan services.
The expectation is that the general credit situation is unlikely to improve any time soon. The increasingly possible CIT bankruptcy offers proof of this. Indeed, there are concerns that until the employment situation improves, and consumer spending starts to pick up, that the credit situation will remain tight. This will mean that it will be difficult to get any number of loans, from auto loans to credit cards to mortgages.
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