JPMorgan Chase (NYSE:JPM), the biggest U.S. bank by assets, reported a 6.6 percent drop in fourth-quarter profit, disappointing Wall Street, as legal costs exceeded $1 billion in the wake of government probes into alleged wrongdoing. Shares dropped.
Net income fell to $4.93 billion, or $1.19 per share, for the October-to-December period, from $5.28 billion, or $1.30 per share, a year ago, the New York-based bank said in a statement today. That missed the $1.31 average estimate of 25 analysts. The results for both periods included special items.
Revenue dropped 3 percent to $22.5 billion from $23.2 billion year-over-year, lagging behind Wall Street’s consensus of $23.64 billion.
The bank 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 are continuing.
However, while legal expenses jumped 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.
Shares declined 1.5 percent to $182.11 at 8:41 a.m. in New York. The stock had lost 4.6 percent since the beginning of the month through yesterday. The stock gained 7 percent last year, trailing the 13 percent gain for the 85-company Standard & Poor’s 500 Financials Index (INDEXSP:SP500-40).
Revenue from fixed-income trading fell to $2.5 billion on the sale of a commodities unit and lower volume in credit and securitized products. Excluding the sale, fixed-income markets slipped 14 percent.
Revenue from equities trading increased 25 percent to $1.1 billion on gains in the derivatives and prime-brokerage business.
Profit at the corporate and investment bank increased 3 percent to $972 million. Excluding the impact of accounting adjustments tied to the firm’s own debt, profit at that division plunged 50 percent to $1.1 billion.
JPMorgan Chase is the first big bank to report its fourth quarter results. Also today, Wells Fargo (NYSE:WFC), the biggest U.S. mortgage lender, reported a slight increase in quarterly profit as net interest income rose.