famous james gorman/body language meter predicting "decent" earns ppl @MorganStanley say "hes walking around like his d–k is at half mast"
— Charles Gasparino (@CGasparino) January 16, 2015
JP Morgan Chase’s third-quarter results were published more than three hours ahead of schedule because of a mistake by Shareholder.com, the investor-communications company owned by Nasdaq OMX Group Inc. “The root cause was a human error internally at Shareholder.com,” Ryan Wells, a Nasdaq spokesman, said in an e-mailed statement. Shareholder.com provides companies with Internet services including website maintenance for investor relations. JPMorgan’s earnings press release and supplement appeared online at about 3:30 a.m. in New York. The bank had set 7 a.m. for release of the market-sensitive data. [Bloomberg]
The day the Feds start listening to Ackman and shut down Herbalife will surely take the cake, but until then, this will have to do: Read more »
Citigroup‘s profits tumbled 96 percent in the second quarter, dragged down by a huge charge related to its recently announced deal with the Justice Department to settle an investigation into its sale of mortgage securities in the run up to the financial crisis. The charge for the legal settlement totaled $3.8 billion, marring an otherwise relatively strong quarter for the bank that was helped by better than expected trading results. Not accounting for the legal charge, or other one-time items, Citigroup exceeded Wall Street expectations in the second quarter with adjusted earnings of $1.24 a share, On that basis, analysts had been expecting Citigroup would earn $1.05 a share, according to a survey by Thomson Reuters…Earlier on Monday, the bank announced a $7 billion deal with the Justice Department. The deal includes a $4 billion cash penalty, the largest yet by a large bank to settle federal investigations of mortgage misdeeds. [Dealbook]
GS had earnings today and I guess they weren’t that good but all anyone ever wants to talk about on earnings calls these days is leverage ratios. That I suppose is a sociologically interesting fact: is banking a business of selling stocks and bonds and loans and whatnot, or is it a business of optimizing yourself around regulation? You can tell what the analysts think, though I suppose that’s like a second derivative; they want to add value to whatever was already obvious to the market. The stock price dropped on, like, not selling enough stocks and bonds and whatnot. Or rather: on making too much money from owning stocks and bonds with Goldman’s own capital, and too little on doing more obviously Volcker-compliant-y things. So: still sort of a regulatory question I guess.
But, yeah, all the analysts want to talk about is leverage ratios, and you know who does not want to talk about leverage ratios is Harvey Schwartz. Delightfully someone at Reuters counted the number of times he was asked to quantify Goldman’s leverage ratio (eight1) and the number of times he did (zero). He said he was “comfortable” with it, which presumably means that GS will be above 5% by 2018 assuming some rates – possibly at, above, or below the current rates – of capital generation and capital return. But they haven’t done the math yet.
Which is curious? Read more »
One of the pleasures of every JPMorgan quarterly earnings call is hearing Jamie Dimon’s, and now Marianne Lake’s, authoritative-sounding pronouncements on proposed regulations. You sometimes get the sense that regulations can’t be adopted without Dimon’s approval, so his views on these calls provide some sort of indicator of which of the proposals might actually happen. Plus, general amusing orneriness.
So how’d everyone do? Well, they think Nouveau Glass-Steagall is pretty silly, for one thing: in response to an analyst question about it, Lake said “we don’t spend much time thinking about it.”1 Oof! Get outta here with your Glass-Steagalls.
But the theme of the call was mostly “could you tell us more about your leverage ratio?” Here, JPMorgan is not so fond of the new Basel III leverage ratio proposals. The earnings deck walks through how JPMorgan will comply with the new U.S. leverage ratio rules, but it does not do any math on the effects of the new Basel proposals to do creepy things like disallow derivatives collateral netting. When asked to quantify the leverage under those proposals, Lake and Dimon declined, saying that there are “fundamental problems” with those proposals. So they have chosen to ignore them and, presumably, they will go away. Read more »
- When they lose money, that strengthens their capital position, and
- When they make money, that weakens their capital position, requiring them to sell shares.
Maybe? Three months ago we talked about how … well, I said “Deutsche Bank Improved Its Balance Sheet By Losing A Lot Of Money,” which I guess seemed funnier at the time, but to be fair (1) Bloomberg said “Deutsche Bank ‘took pain’ in the quarter by booking a loss to boost its capital ratio without selling shares,” which is about equally funny or unfunny, and (2) Deutsche did in fact have a 4Q loss of €2.2bn and yet increased its Tier 1 capital ratio by 90bps.
The Management Board of Deutsche Bank AG resolved today, with the approval of the Supervisory Board, to execute a capital increase, which is intended to raise gross proceeds of approximately EUR 2.8 billion. The purpose of the capital increase is to strengthen the equity capitalisation of the bank. Read more »