|
Morgan 1Q tops forecast
|
 |
April 12, 2000: 11:49 a.m. ET
No. 5 U.S. bank posts surprise profit gain, driven by investment banking
|
NEW YORK (CNNfn) - Banking firm J.P. Morgan & Co. Wednesday posted record first-quarter profit on a healthy gain in revenue from underwriting and trading stocks, a surprise to analysts who had expected a drop in earnings.
The nation's fifth-largest bank in terms of assets earned $628 million, or $3.37 a diluted share. That's about 20 percent better than the estimates of analysts polled by First Call Corp., which had forecast $2.81 a share profit. In the year-earlier period, the company earned $600 million, or $3.01 a share.
 Equity market volatility, literally a mainstay of U.S. financial markets in the first three months of 2000, helped bolster the New York-based bank's bottom line considerably, according to analysts. In recent years, J.P. Morgan has scaled back its corporate lending to focused more on underwriting stock offerings and trading -- something that makes it more susceptible to volatile markets but offers more in terms of potential profit.
The company said revenue rose 14 percent to $2.8 billion on strong momentum in equities, investment banking, and asset management services.
Lots of M&A
While J.P. Morgan still is a commercial bank, much of its focus is in its investment banking operations. The company participated in 18 percent of global mergers and acquisitions during the quarter, according to Thompson Financial Securities Data Corp., making it the fifth-largest participant.
Revenue from investment banking gained 41 percent to $364 million, driven by record proceeds from equity underwriting and derivatives, as well as strong results from European clients, technology and biotechnology clients.
 The company said results from equity underwriting more than doubled as it maintained its top-three lead manager ranking for transactions larger than $500 million and gained share overall.
In the past, bank stocks and earnings have been hurt at a time of rising interest rates -- such as the one under way now after five Federal Reserve rate increases since last June. But the diversification of major banks into areas such as investment banking, financial services and Internet-related venture investing has lessened that impact, Andy Collins, a senior banking analyst with ING Barings, told CNNfn's Before Hours. (232KB WAV) (232KB AIFF)
While Collins has a "hold" rating on the stock for the long term, he believes Wednesday's earnings surprise should help it see some short-term gains. "It's a very strong showing for them," he said.
Shares of J.P. Morgan (JPM: Research, Estimates) Wednesday gained 5-9/16, or just over 4 percent, to 140-5/16.
(Click here for other earnings news) 
|
|
|
|
|
|
J.P. Morgan & Co.
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
