[ed. As I understand it: suppose the equity in your house declined by 25 percent, you then turn around and claim you actually made a 25 percent profit because now you can buy it back at a 25 percent discount (some time in the future). Bankers..].
by Joe Weisenthal, Business Insider
JPMorgan Q3 earnings have come in better than expected, at $1.02.
But it's a bank report, so were going to need to look deeper to see if it's good.
The first red flag is the Debt Valuation Adjustment: The company booked a big gain BECAUSE its bonds worsened significantly, meaning technically on an accounting basis, the company's equity jumped. Read an explanation here.
Here's their commentary
by Joe Weisenthal, Business Insider
JPMorgan Q3 earnings have come in better than expected, at $1.02. But it's a bank report, so were going to need to look deeper to see if it's good.
The first red flag is the Debt Valuation Adjustment: The company booked a big gain BECAUSE its bonds worsened significantly, meaning technically on an accounting basis, the company's equity jumped. Read an explanation here.
Here's their commentary
Jamie Dimon, Chairman and Chief Executive Officer, commented: “The Firm reported third-quarter net income of $4.3 billion, representing a 13% return on tangible common equity1. It is notable that these results included several significant items(*), including a $542 million pretax loss in Private Equity, $1.0 billion pretax of additional litigation expense in Corporate and a $1.9 billion pretax DVA gain. The DVA gain reflects an adjustment for the widening of the Firm’s credit spreads which could reverse in future periods and does not relate to the underlying operations of the company. All things considered, we believe the Firm’s returns were reasonable given the current environment.”
