[金融地产] 20080720-Citi-JP Morgan Chase & Co (JPM)

2Q08 Quarter – Some L/T Positives in a Tough Environment
 2Q results better than expected – JPM reported $0.54 vs. consensus of $0.44.
The story of the quarter is threefold: 1) Strong market share gains in key
businesses (including a very strong investment banking quarter), 2) Good
progress in downsizing its high risk exposures (legacy leveraged loan
commitments and mortgage exposure) plus $40 billion ahead of plan reducing
Bear balance sheet, and 3) Credit quality deterioration was less than expected.
 Gaining share – We saw signs of strong market share gains in many of JPM’s
key businesses such as: investment banking (including very strong quarter for
fixed income), mortgage banking (origination market share has doubled over
past 18 mos), and in commercial banking. Investments in the retail banking
franchise continue, but deposit market share gains remain elusive.
 Credit Quality – Positive news was a lower target for HELOC losses after several
quarters of upward revisions. Mgmt did raise guidance for its jumbo
mortgage/Alt-A portfolio, which reflects heavy 2007 vintage influence. Credit
card trends are tracking in line, but potential for a 100 bp increase in losses
can present a $0.25 EPS headwind. Reserves were increased again in
investment bank, and there is potential for large charge-offs ahead.
 Increasing Estimates and Target – Raising ‘08 est by $0.35 to $2.45 and ’09 by
$0.25 to $3.25 reflecting better performance in the IB. In line with our higher
estimates, we increase our target price by $2 to $40.