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Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

*Troubling Result: J.P. Morgan Chase &amp; Co (JPM.US) [JPM] reported 2Q21 bottom-line results of USD 11.9 bn, declining USD 2.4 bn (16.4%) linked quarter, as four out of five business units posted bottom-line declines pushing overall revenues lower USD 1.6 bn (5.0%). On a core operating basis, JPM’s results declined somewhat less – down USD 2.2 bn or 15.3% over the period. Results were weak almost across the board; and*Credit Quality Reversing Previous Gains: We calculate that net new NPLs linked quarter grew USD 4.9 bn bn or 177.3% on an annualized basis – a far cry from the 22.2% and 0.2% increase at 1Q21 and 4Q20, respectively. While JPM would appear on its face to be well-provided for, provision releases now appear to be coming to an end. If the current uptick in net new NPLs is here to stay, JPM would appear light on reserves in the neighborhood of USD 7.0 bn or 50% of quarterly PBT.

*Troubling Result: J.P. Morgan Chase &amp; Co (JPM.US) [JPM] reported 2Q21 bottom-line results of USD 11.9 bn, declining USD 2.4 bn (16.4%) linked quarter, as four out of five business units posted bottom-line declines pushing overall revenues lower USD 1.6 bn (5.0%). On a core operating basis, JPM’s results declined somewhat less – down USD 2.2 bn or 15.3% over the period. Results were weak almost across the board; and*Credit Quality Reversing Previous Gains: We calculate that net new NPLs linked quarter grew USD 4.9 bn bn or 177.3% on an annualized basis – a far cry from the 22.2% and 0.2% increase at 1Q21 and 4Q20, respectively. While JPM would appear on its face to be well-provided for, provision releases now appear to be coming to an end. If the current uptick in net new NPLs is here to stay, JPM would appear light on reserves in the neighborhood of USD 7.0 bn or 50% of quarterly PBT. 

JPMorgan Chase & Co

J.P. Morgan & Co. – Not Good Jamie