MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
an InvestmentWires' Publication
|
|
MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication |
|
Thursday, January 17, 2013 Three Things to Know from JP Morgan’s Earnings Although the company as a whole, and chief executive Jamie Dimon in particularly, is still nursing some nasty shiners from the London Whale debacle, JP Morgan’s [profile] mutual fund business had a good year. Company-wide, JP Morgan reported net income for the fourth-quarter of 2012 of $5.7 billion, compared with net income of $3.7 billion in the fourth quarter of 2011. Earnings per share were $1.39, compared with $0.90 in the fourth quarter of 2011. Revenue for the quarter was $24.4 billion, up 10 percent compared with the prior year. If you look at SeekingAlpha transcript of the earnings call, as well as the company’s earnings presentation itself, you’ll get at least three good takeaways about the company’s fourth quarter in 2012. They are: POINT #1: The Asset Management Biz Was Very Profitable POINT #2: The Mutual Fund Complex is Growing POINT#3: Cross-Selling is King Here are the points in greater detail. POINT #1: The Asset Management Biz Was Very Profitable During the fourth quarter of 2012, the division saw a net income of $483 million, an increase of $181 million, or 60 percent, from the prior year. The company said these results reflected higher net revenue, partially offset by higher noninterest expense. Meanwhile, the business’ net revenue was a record $2.8 billion, an increase of $469 million, or 21 percent, from the prior year. Non-interest revenue was $2.2 billion, up $363 million, or 20%, from the prior year due to higher performance fees, the effect of higher market levels and net client inflows. The company saw record assets under management of $1.4 trillion, up 7 percent year over year, with AUM new inflows for the quarter reaching $32 billion, with $24 billion going to liquidity products and $8 billion to long-term products. About 76 percent of the mutual fund assets under manager were ranked in the first or second quartiles for five year performance. Meanwhile, expenses were up 11 percent year over year due to higher performance-based compensation and higher headcount-related expenses. During the earnings conference call, Dimon noted that asset management performance fees were “bettered by over $100 million versus the fourth quarter last year.” However, he admitted that “the fourth quarter last year wasn’t particularly good, by the way.” POINT #2: The Mutual Fund Complex is Growing Dimon himself noted during the conference call that “our mutual fund complex has been growing.” The earnings presentation shows that the asset management division increased the headcount by 444, or over two percent year over year, to 18,480 in the fourth quarter. POINT#3: Cross-Selling is King Dimon regularly remarked on the importance of cross-selling during the earnings conference call. For instance he noted during the call that “Asset management, I put in the sticky category,” and also noted “record results in commercial banking, asset management, and a lot of cross-sell on that.” He ultimately had this to say about the importance of the branches: The power of that franchise is extraordinary. 40% of our retail branches are credit cards today. A big chunk of our mortgage sales come out of the branches. Most of our small business is served out of the branches. Middle market is served out of the branches. The branches are becoming an enormous competitive advantage for asset management. Check for yourself on the SeekingAlpha transcript of the earnings call, as well as the company’s earnings presentation. Printed from: MFWire.com/story.asp?s=42736 Copyright 2013, InvestmentWires, Inc. All Rights Reserved |