From Barrons: JPMorgan Chase remains at the top position in the industry in terms of global investment banking fees. But that didn’t stop the bank from posting a significant drop in fees in the third quarter: fees fell to $1.04 billion, down 31% year-over-year on lower industry-wide volumes. That was just one red flag in a report that could weigh on stocks in the industry today.
The company beat analysts’ earnings expectations, posting $1.02 in EPS against expectations for 91 cents. But an accounting shift based on a new valuation of the company’s debt (or DVA), was responsible for $1.9 billion (on JP Morgan’s total net income of $4.3 billion), making the beat seem less impressive.
In addition, JP Morgan posted a 9% return on equity, down from 12% in the second quarter and 10% a year ago. Single-digit ROE’s are a particular point of concern for investors. Given the weak trading and investment banking results at JP Morgan, banks like Goldman Sachs (GS) could end up posting similarly weak results….
Don't stop now. Find out more at http://blogs.barrons.com/stockstowatchtoday/2011/10/13/why-jp-morgans-earnings-results-could-spell-trouble-for-big-financials/?mod=yahoobarrons
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