The mortgage business may be doing poorly and credit card default rates may rise since people can no longer tap home equity, but JPMorgan Chase & Co. (NYSE: JPM) does not appear to care. Nor should it.
Revenue at the big bank rose 25% to $18.97 billion in the first quarter. Net income was up about 55% to $4.8 billion.
The improvement came in the investment banking and private equity areas. Growth from retail banking was lackluster and credit card revenue was down.
Investment banking revenue rose to $6.8 billion from $4.8 billion and net income for the group was up 81% to $1.5 billion. The engines for the increase were private equity transactions and debt and equity underwriting.
The company now trades at a 52-week high of $51.95.
The risk to JPMorgan is that demand for investment banking will slow. The shares have already had a good run, gaining 45% over the past two years, compared with a 16% increase at Bank of America Corp. (NYSE: BAC) and a 15% jump at Citigroup Inc. (NYSE: C).
If the private equity environment and underwriting businesses soften due to a falling stock market or higher interest rates, JPMorgan's stock could go down as fast as it went up. It happened in 2002, and it was bloody.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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