JP Morgan Chase, U.S. Banks, and Considerations
JP Morgan Chase reported 2011 Q4 earnings at 7am EST this morning, a preview of next week's heavy reporting by the U.S. financial services sector; the 7am release is an interesting read.
The largest U.S. bank by assets, JPM reported a fourth-quarter profit decline of 23 percent; generally the report followed analysts’ estimates; JPM's provisions for credit losses declined. Net income for the last three months of the year fell to $3.73 billion, or 90 cents a share, from $4.83 billion, or $1.12, in the same period of 2010.
Industrywide, lending at U.S. banks increased 2.1 percent from the third to the fourth quarter, according to Federal Reserve data (and as cited separately by Bloomberg News today).
Investors seeking exposure to the financial services sector, and when analyzing data today and next week, would consider the financial results of each separate lines of business that a financial institution offers, including core banking deposits and lending; credit card and revolver debt, mortgage lending; systems and asset management; alternative assets and private capital. Each of these lines of business will perform differently and should be analyzed as each contributes differently to the aggregate performance of an institution.
Again, a diversified portfolio designed for the long term, considering volatile valuations in all sectors, should be considered by investors.