JP Morgan Chase's Q2 Earnings Off, Retail Advisory Business a Bright Spot

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Okay, so the London Whale "helped" the firm report a $4.4bn loss at JPMorgan Chase. Not to worry, Mister Dimon says JPM Chase (Ticker: JPM) will "no longer trade a sunthetic credit portfolio and will focus on its core mandate of conservatively investing excess deposits to earn a fair return." And, by the way, though the company posted lousy overall results, the "client-driven" businesses [i.e. NOT the prop trading and the like] had solid performance," says Dimon. (This is from this a.m.'s earnings reports and press release.)

And indeed it seems so. If you are an advisor in the Chase Private Client group, perhaps you're okay. The company reported that revenue from the private banking biz hit $1.3bn, up 4% from Q2 last year. Institutional was down a whopping 23% and "revenue from retail," as the news release puts it, was down 12% to ($486m in revenue for Q2). Basically, the way I read that, is that the bank is gathering money just fine, but its clients are not actually investing the funds --- perhaps too scared and sitting on the sidelines. It doesn't appear that the asset management business was able to convert the deposits into management fees.

But here is the interesting part. Assets under supervision (advisory) were $2trn, an increase of $44bn, or 2% year-over-year. "Custody, brokerage, administration and deposit balances were $621bn, up by $39bn, or 7% due to custody and deposit inflows."

Apparently indviduals, the average retail investor, doesn't care much about the investment bank or prop trading desks. Perhaps it is true: It's the relationship a financial advisor has with his client that matters most. But then FAs have been arguing that point for ages.

 

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