Strength in Consumer Banking Segment Drove JPM’s 4Q15 Performance



J.P. Morgan’s segment-wise earnings

J.P. Morgan operates under the following segments:

  • consumer and community banking, which is further divided into consumer and business banking, mortgage banking, card, commerce solutions, and auto
  • corporate and investment banking
  • commercial banking
  • asset management
  • corporate

Out of these segments, the consumer and community banking contributes roughly 48% to the bank’s net revenues. This segment reported revenues of $11.2 billion for 4Q15, 2% higher compared to the corresponding period last year. The growth was driven by improvement from the cards, commerce solutions, and auto business, but negatively impacted by lower revenues from the mortgage banking business. However, net income increased by 10% year-over-year. Net interest income was down 5%, reflecting the tightening of spreads, but was offset by higher loan balance and deposits.

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The corporate and investment banking division reported revenues of $7.1 billion, a decline of 4% from 4Q14. Net income increased 80% year-over-year to $1.7 billion on lower legal expenses. Investment banking revenues fell by 11% due to higher advisory fees and lower debt underwriting fees. Treasury services revenue slid 4% to $901 million mainly due to lower net interest income.

The commercial banking division underperformed and net income fell by 21% to $518 million due to lower investment banking revenues and yields compression.

Assets under management were down 1% year-over-year to $1.7 trillion, mainly due to weak markets. Net revenues from this segment were $3 billion, a decline of 5%.

J.P. Morgan (JPM) has a weight of 8.1% in the Financial Select Sector SPDR ETF (XLF). Peers like Citigroup (C) and Wells Fargo (WFC) are due to report their earnings on January 15. Meanwhile, Bank of America (BAC) and Goldman Sachs (GS) will report next week.


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