Home Morning Commentary Morning Commentary – Bank Earnings

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During the early part of this week, the financial journalists and Wall Street analysts were all talking about, and anxious for, earnings season to start.  JP Morgan was one of the first to report and because of the recent passage of the tax bill, it was more interesting than normal.

When asked about the tax changes, CEO Jamie Dimon said:U.S. companies will be more competitive globally, which will ultimately benefit all Americans. The cumulative effect of retained and reinvested capital in the U.S. will help grow the economy, ultimately growing jobs and wages. We have always invested, even in difficult times, in our employees, customers and communities, and as a result of the tax plan we will be increasing and accelerating some of these investments.”

On the same subject, the corporation reported the following:

Will JPM actually repatriate cash and if so how will it be used?

  • No significant remittance of cash expected – we have capital and liquidity requirements in foreign entities – it is a deemed repatriation

Why does a reduction of 14% in the federal tax rate translate into a lower reduction in the JPM effective tax rate?

  • Difference driven by the geographic mix of taxable income, non-deductibility of FDIC fees and the impact of a lower tax rate on other deductions

What is JPM doing to share the benefit with its employees, customers and communities?

In addition to programs already in place, we are planning a broad set of strategic and sustainable benefits for our employees, customers and communities.

Overall, JPM earnings beat expectations, with adjusted EPS of $1.76/share – better than the expectations of $1.69.


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