Insightful analysis and commentary for the US and global equity investor
Contributors: Douglas McIntyre Jon C. Ogg

Previous Posts

Wednesday, July 19, 2006

Widely Held 48 Hour Clock: JP Morgan and B of A Report

Two of the big money center banks reported today, and, surface, there was not a lot to complain about.

Revenue at Morgan was up 19% to $14.94 billion.

However, good results in the credit card area of the bank and weak mortgage results may say more about the future that the good Q2 report. As the economy slows, credit card defaults and tardy payment almost always pick up. Mortgage banking had a net loss of $7 million in the quarter compared to net income of $124 million in the same period a year ago.

JP Morgan's results, which included a tripling of net income to $3.5 billion are nothing short of spectacular, but future results will be affected by whether corporate and investment banking results can continue to out run retail, credit card, and mortgages a the same rate.

Bank of American posted an increase in net income of 18% to $5.5 billion. MBNA, the credit card giant that B of A bought was a big part of results. Card services had revenue of $5.47 billion, a 163% increase. Once again, it will be interesting to see to what extent credit quality in a slowing economy will change future results.

Morgan's stock rose almost 4% on the news to $42.25, near its 52-week high. Bank of America also traded near its 52-week high of $50.50, hitting $49.20 on its earnings news.

The road ahead may not be quite as smooth, so the stocks may not be going up much more.

Douglas A. McIntyre can be reached at He does not own securities in companies he writes about.

Powered by Blogger