JPMorgan Q4 profit falls 7% hit by costs of court battles
By Ken Sweet, APNEW YORK--JPMorgan Chase said Tuesday that its profits fell 7 percent in the fourth quarter, hampered by more legal woes and a decline in the bank's investment banking business.
January 16, 2014, 12:09 am TWN
The bank reported net income of US$5.28 billion in the last three months of 2013, down from US$5.69 billion in the same period a year earlier.
On a per-share basis, JPMorgan said it earned US$1.30 a share in the quarter, compared with US$1.39 a share a year earlier. The bank's revenue fell 1 percent to US$24.1 billion.
The bank's most recent results had several one-time items, including a 27-cent-per-share charge related to legal expenses. On an adjusted basis, the bank said it earned US$1.40 per share. One of those legal expenses was the settlement over the bank's involvement in the Ponzi scheme of Bernard Madoff. The bank agreed Jan. 8 to pay US$1.7 billion to settle criminal charges stemming from its failure to report its concerns about Madoff's private investment service.
“It was in the best interests of our company and shareholders for us to accept responsibility, resolve these issues and move forward,” JPMorgan CEO Jamie Dimon said in a statement.
Most of the bank's divisions reported year-over-year increases in profits, with the exception of JPMorgan's investment banking business. That business reported a 57 percent decline in earnings as the bank readjusted the value of some of its over-the-counter investments.
The bank said mortgage originations fell by 54 percent in the fourth quarter from a year earlier. JPMorgan is one of several banks, along with Wells Fargo and Citigroup, who have said mortgage originations have slowed in recent months. The increase in bond yields since the summer has caused mortgage rates to rise, which in turn has stopped consumers from refinancing their home loans. Mortgage giant Freddie Mac said last week that the average 30-year fixed rate mortgage had an interest rate of 4.51 percent, compared to 3.35 percent in May of 2013.
JPMorgan has replaced two million debit and credit cards as a result of security breach at retail chain Target, Dimon said. “Unfortunately, this type of cybercrime is not going away,” he said in a conference call with analysts.