JPMorgan Chase CEO: banks 'under assault' from regulators
JPMorgan Chase reported a 7 percent drop in profits Wednesday and faced $1.1 billion in additional legal costs. JPMorgan agreed in November to pay $1 billion in penalties over its conduct in foreign exchange markets. Investigations into that and other areas, including alleged manipulation of Libor interest rates, are continuing.
JPMorgan Chase reported a 7 percent drop in fourth-quarter earnings Wednesday, hit by more legal costs and a drop in trading revenue.
JPMorgan, the biggest U.S. bank by assets, said it earned $4.93 billion, or $1.19 a share, for the three-month period ending in December. That compares with a profit of $5.28 billion, or $1.30 a share, a year ago.
JPMorgan agreed in November to pay $1 billion in penalties over its conduct in foreign exchange markets. Investigations into that and other areas of the bank's business, including alleged manipulation of Libor interest rates, are continuing.
"Banks are under assault," Dimon said on a conference call with reporters on Wednesday, responding to a question about the bank's legal costs.
"We have five or six regulators coming at us on every issue."
"Obviously companies make mistakes. We try to resolve it, we try to fix it, we admit it," he said.
However, while legal expenses rose to $1.1 billion in the fourth quarter, from $847 million in the same quarter last year, total legal costs of $2.9 billion for the year were far less than the $11.1 billion recorded in 2013.
Apart from legal costs, JPMorgan's earnings were hit by a 14 percent fall in revenue from fixed-income trading, after adjusting for the sale of the bank's physical commodities business and accounting changes.
The results from JPMorgan - the first big U.S. bank to report for the quarter - are a pointer to the performance of its competitors, which are also struggling to adjust to stricter trading rules in the aftermath of the financial crisis.
Like other banks, JPMorgan has also been investing heavily to improve risk controls and system security.
The bank revealed in October that names, addresses, phone numbers and email addresses of the holders of about 83 million accounts were exposed when its systems were hacked.
Net income fell to $4.93 billion, or $1.19 per share, from $5.28 billion, or $1.30 per share a year earlier. Revenue on a managed basis fell 2.3 percent to $23.55 billion.
JPMorgan's results were hit by a $990 million charge after taxes for legal expenses, more than analysts expected. The bank's results have been impacted by various legal costs over the last several quarters as it has settled lawsuits with state and federal regulators over its role in the housing bubble and subsequent financial crisis.
Total revenue fell 3 percent to $22.5 billion from $23.2 billion a year ago.
JPMorgan's investment banking division was hit by the sale of its commodities trading division and a slowdown in bond trading, one of the bank's larger businesses. Fixed-income revenue fell 23 percent from the prior year to $2.5 billion.
In the bank's commercial banking division, which includes credit cards, checking accounts, mortgages, and auto loans, there are signs that consumers are more willing to take on debt and are spending more.
Credit card balances were up 3 percent to $131 billion, while merchant processing volume, the amount of money being spent on the bank's credit and debit cards, was up 13 percent from a year ago. The bank processed 10.3 billion transactions in the quarter, up 7 percent from a year ago.
The bank also had an 8 percent increase from the prior year in auto loan originations.
The results missed Wall Street expectations. The average estimate of analysts surveyed by FactSet was for earnings of $1.31 a share.
JPMorgan shares fell 1.4 percent in pre-market trading to $58.