April 13 - Better-than-expected first-quarter results from JP Morgan Chase and Wells Fargo kick-off what is anticipated to be the strongest earnings season for the financial sector in decades. Conway G. Gittens reports.
Profits at JP Morgan Chase were down 3 percent, but results for the first quarter were still better than expected. The numbers show a bounce-back in business at America's largest bank after a dismal end to 2011. A surge in business at JP Morgan's retail financial business, which includes the Chase bank branches, led to a 6 percent gain in revenues from a year ago and a 24 percent jump quarter-to-quarter to more than $27 billion. Chris Whalen is senior managing director at Tangent Capital. SOUNDBITE: CHRIS WHALEN , SENIOR MANAGING DIRECTOR, TANGENT CAPITAL (ENGLISH) SAYING: "JPM came in with good revenue. Their revenue had been flat to down going back six quarters, so 27 (billion dollars) is a good number. However, you have to ask yourself: what's the rest of the year going to look like and I think what you are going to see is higher expenses. You're going to see flat to down on investment banking and remember JP is not that aggressive on the whole mortgage market." But that's where Wells Fargo saw its strength. The fourth largest U.S. bank saw a rise in overall revenues led by mortgage banking, leading to a 13 percent jump in first quarter profits. But the company warned its cost-cutting program may not result in as many savings as first hoped. Nevertheless the first two big results out of the sector bolstering expectations the first quarter will be the strongest reporting season for the group in decades. Next up: Citigroup, which did not pass the Federal Reserve's latest stress test, and for some investors, is still carrying the scars of the financial crisis. But that's changing says, Thomson Reuters Starmine analyst Sri Raman. SOUNDBITE: SRI RAMAN, SENIOR QUANTITATIVE RESEARCH ANALYST, THOMSON REUTERS STARMINE (ENGLISH) SAYING: "At least the analysts think for this quarter they have put all that behind them because of the regulations it seems like they are less leveraged and they are getting more stable. So there is less risk to the bank." Citi's results are released before the opening bell on Monday. Conway Gittens, Reuters