The second largest bank by assets reported a 67% growth in profits, but revenue was on the lighter side. Analysts had been hoping for a pickup in loan growth, but except for the commercial banking segment, which saw a 7% increase in loans over the corresponding previous quarter, all other segments saw lower loan balances.
The dim revenue outlook and continuing problems associated with its mortgage businesses -- the bank reported a $1.1 billion provision for credit losses arising from its real estate portfolios and a loss of $1.1 billion for the impact of increased servicing costs on the fair value of the firm's mortgage servicing rights asset, among other charges -- dampened expectation for solid earnings reports from Bank of America (BAC), due to report on April 15, and Citigroup (C) and Wells Fargo (WFC), which report next week.
In addition, JPMorgan CEO Jamie Dimon said that investors should not expect dividend increases for some time.Shares of JPMorgan were losing 0.9%. Shares of Citigroup and Wells Fargo were down by 1.5% each, while Bank of America saw its shares slip by 1.1%. Regional Bank HOLDRs (RKH) was shedding 1.5%. JPMorgan accounts for about 23% of its portfolio, while Wells Fargo takes up another 20%. Broader banking sector ETFs such as iShares Dow Jones US Financial Services ETF (IYG) and SPDR Financial ETF (XLF) were losing about 0.8% each. Regional banks were also under pressure, with the SPDR KBW Regional Banking ETF (KRE) down by 1.2%. Banking stocks have not participated in the rally in recent months, weighed by concerns about impact of new regulations, as well as a tepid revenue outlook. Some analysts have argued that bank stocks need to rally for the stock market to move higher. --Written by Shanthi Bharatwaj in New York
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