JPMorgan, the market leader for structured products in the US, has reported gains of $173m for funding valuation adjustments (FVA) and debit valuation adjustments (DVA) on OTC derivatives and structured notes, according to the bank’s results for the second quarter of 2014.
The bank’s corporate and investment banking (CIB) division had previously reported FVA and DVA losses of $30m and $2bn, respectively, for the quarters ending 31 March 2014 and 31 December 2013.
Principal transactions
JPMorgan also reported that principal transactions included a $1.5bn loss in the fourth quarter of 2013 as a result of implementing a FVA framework for OTC derivatives and structured notes.
Investment banking fees were $1.8bn, up 3% from the previous year. The increase was driven by higher advisory fees of $397m, up 31% from the prior year on strong wallet share of completed transactions, as well as higher equity underwriting fees of $477m, up 4% from the previous year.
“The corporate & investment bank saw strong performance in fees with the number 1 position in global investment banking fees year to date, global debt and equity, global syndicated loans and global long-term debt,” said Jamie Dimon, chairman and chief executive of JPMorgan.
Credit adjustments for CIB consisted primarily of credit valuation adjustments (CVA) managed by the credit portfolio group, and FVA (effective fourth quarter 2013) and DVA on OTC derivatives and structured notes.
Results were presented net of associated hedging activities and net of CVA and FVA amounts allocated to fixed income markets and equity markets, the bank said.
Market leader
JPMorgan has been the main provider for structured products in the US since 2011. The bank currently has a share of 15% of the US market, ahead of Barclays (11%), Credit Suisse (11%), Goldman Sachs (8.5%) and UBS 8%).
So far this year JPMorgan has sold 197 structured deposits and 689 structured notes with a combined sales volume of $3.6bn in the US, including the bestselling 8% Equity Linked Notes which struck in April and collected €80m during the subscription period.
In 2013, when the bank had an 18% share of the US market, 808 structured deposits and 1,584 structured notes worth $8.9bn were added to SRP’s US database.
Overall results
JPMorgan reported net income for the second quarter of 2014 of $6bn, compared with net income of $6.5bn in the second quarter of 2013.
Earnings per share were $1.46, compared with $1.60 in the second quarter of 2013. Revenue for the quarter was $25.3bn, down 2% on the previous year.
“Despite continued industry-wide headwinds in markets and mortgage, the firm has continued to deliver strong underlying performance,” Dimon said. “Consumer and community banking deposit growth and card sales volume both outpaced the industry, and we had record loan originations in business banking. Commercial banking clients generated record investment banking revenues in the first half of the year. Asset management had excellent performance across all measures.”
Click here to read the JPMorgan Chase financial results Q2 2014. Click here to read the JPMorgan Chase earnings release financial supplement Q2 2014
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