CORPORATE RESULTS

Better economy lifts JPMorgan

An uptick in trading and dealmaking lifted JPMorgan Chase & Co’s first-quarter profits out of the funk of late 2011, but the recovery fell short of the good times the largest US bank enjoyed a year ago. JPMorgan said yesterday first-quarter net profit fell 3%, but its results beat Wall Street expectations, helped by a rebound in investment banking revenue from the fourth quarter. Improvements in credit quality and loan demand also boosted results and provided a positive sign for the economy. JPMorgan’s higher investment banking revenue, after a dismal 2011 fourth quarter, also bodes well for rivals such as Goldman Sachs Group Inc, Morgan Stanley, Bank of America Corp and Citigroup Inc, which will all report results in the coming days. JPMorgan said first-quarter net income was $5.4bn, or $1.31 a share, compared with $5.6bn, or $1.28 a share, a year earlier. Analysts had been expecting $1.18 a share, according to Thomson Reuters I/B/E/S. Per-share earnings rose because of a 4% decline in quarter-end share count due to share buybacks. Revenue was $27.4bn, up 24% from the 2011 fourth quarter and up 6% from the first quarter of 2011. Investment banking posted net revenue of $7.3bn, down 11% from a year earlier but up 68% from the 2011 fourth quarter.

Wells Fargo

Wells Fargo & Co reported higher first-quarter profits yesterday as the bank posted strong mortgage banking results and set aside less money for bad loans. Wells Fargo, the nation’s fourth-biggest US bank, said net income was $4.25bn, or 75¢ a share, in the quarter, compared with $3.76bn, or 67¢, a share in the same period a year earlier. The average estimate from analysts was 73¢ per share, according to Thomson Reuters I/B/E/S. It was not immediately clear whether the results were comparable. The bank’s expenses increased to $13bn from $12.5bn in the fourth quarter, partly because of higher personnel costs and $314mn in expenses primarily related to higher legal reserves. The bank said it is targeting expenses of $11.25bn in the fourth quarter, which is at the upper range of its goal for an efficiency program called Project Compass. Wells Fargo recorded a loan-loss provision of about $2bn, which was down from about $2.2bn a year earlier. The bank boosted results by reversing reserves it had previously booked for bad loans for the eighth straight quarter.

SAP

Germany’s SAP AG gave a bullish outlook for the second quarter, reflecting demand for software such as its HANA technology which helps clients quickly mine large chunks of business data, sending its shares higher. SAP shares jumped 2.2% shortly after SAP, the world’s largest maker of business software, said it expected second- quarter software revenue growth in a range of 15 to 20%, described by one trader as “a distinctly bullish forecast”. SAP, which is due to publish detailed figures on April 25, also kept its full-year outlook for a rise in operating profit and sales. Operating profit excluding special items was up 7% to €834mn ($1.1bn) in the first quarter, broadly in line with the average Thomson Reuters I/B/E/S estimate.

Google

Google reported net income of $ 2.89bn, or $ 8.75 per share, in the first quarter and announced a proposal to effectively implement a 2-for-1 stock split. The world’s No 1 Internet search engine reported net revenue, which excludes fees paid to partner websites, of $ 8.14bn.The performance trounced that seen in the same period last year when the California-based company had a net income of $1.8bn on $8.57bn in revenue. “Google had another great quarter,” said company co-founder and chief executive Larry Page. “We also saw tremendous momentum from the big bets we’ve made in products like Android, Chrome and YouTube.” Page said “well over” 170mn people have signed on to Google+ and that the number of people using the company’s Chrome browsing software has topped 200mn. About 850,000 smartphones or tablet computers powered by Android software are activated daily, and YouTube has more than 800mn monthly users, according to Google.

Infosys

Indian software exporter Infosys yesterday said its quarterly profit rose 27%, but disappointed the markets with a lower-than-expected growth forecast that saw its shares plunge. The Nasdaq-listed firm said clients were cautious in an uncertain global economic environment as it announced a consolidated net profit of Rs23.16bn ($454mn) in the three months to March. Profit was Rs18.2bn in the year-earlier period. Infosys forecast its full-year dollar-based revenue for the new fiscal year, which started April 1, at $7.55bn to $7.69bn, an 8 to 10% rise. India’s IT lobby group Nasscom forecasts software export revenues to slow in the new fiscal year, estimating growth of up to 14% to $78bn in the period. “It has been a pretty difficult quarter for us. There has been a slowdown in decision-making from clients,” Infosys chief executive SD Shibulal told television channel CNBC-TV 18.