Sunday, January 16, 2011

JPM A Troubling Trend

I'm digging through the JPM earnings from Friday and found a rather alarming trend regarding efficiency ratios which is a measure of the non interest expense to net revenue.  The higher the number the less efficient the business or in other words the more non interest related expense needed to generate sales.

Q4 2009 - 47%

Q4 2010 - 60%

FY 2009 - 48%

FY 2010 - 58%

Net revenue for JPM FY10 over FY09 was down 3.5% while Q410 over Q409 net revenue was up 5.9%.  Not much of a mention of net revenue in their press release though as the real driver of their earnings "beat" was a reversal of loan loss reserves.

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