Aggressive · Stocks to Consider and Updates

Chase Posts Record Results

New York-based money center bank JPMorgan Chase & Co. (NYSE: JPM – $111.14) said its first quarter profit rose 5% and topped expectations on the strength of its consumer business. The nation’s largest bank reported a record profit of $9.2 billion, or $2.65 a share compared to $2.37 a year ago. Net revenue rose to $29.1 billion from $27.9 billion last year. Analysts had expected earnings of $2.35 a share and revenue of $28.44 billion. The bank said its net interest income rose 8% to $14.45 billion.

       By business segment, Consumer & Community Banking profits advanced a strong 19% on a 9% revenue increase. Higher net interest income, credit card revenues and auto lease income offset lower mortgage servicing revenues. The Corporate & Investment Bank segment’s performance was mixed. The division’s revenues and profits fell 6% and 18%, respectively, compared to its year-earlier showing, but improved on a sequential-period basis. Compared to the prior year, investment banking revenues rose 10% but were more than offset by lower fixed-income and equities markets revenues Profits in Chase’s smaller Asset & Wealth Management unit also declined year-over-year, hurt by lower average market levels and lower brokerage activity. But Commercial Banking profits ticked up 3%, driven by a large number of investment banking transactions and wider deposit margins.

       I continue to like the shares for aggressive investors willing to participate in the diversified, albeit economically sensitive, financial sector of the market. I believe prospects look bright for JPMorgan Chase. The company should continue to benefit from its strong market shares of the credit card and investment banking businesses. And management sees opportunities to grow, including selling mortgages to customers with other products and expanding in new geographic markets, where it plans to open 90 branches this year. The shares have grown dividends about 19% over the past five years to a current annual rate of $3.20 yielding 3%. Full-year earnings should settle at about $9.70 per share providing for a very reasonable valuation of 11 times 2019 estimated results.

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