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JPMorgan's legal bills sink firm into Q3 loss

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JPMorgan Chase's (NYSE:JPM) ongoing string of court battles has taken its toll on the firm's bottom line, as $9.2 billion worth of legal bills led to a $0.4 billion or 17 cents a share loss in the third quarter.

Excluding that charge and other one-time items, the investment bank's net income came to $5.8 billion or $1.42 cents a share, handily beating the mean analyst estimate of $1.19 a share. The adjusted profit was 1.8% higher than the $5.7 billion or $1.40 a share result in the same period a year ago.

Revenue in the three-month period dipped 8% to $23.1 billion from $25.1 billion in the same prior-year period.
The provision for credit losses was $543 million, compared to $1.8 billion in the previous year's third quarter.

In JPMorgan's quarterly statement, chairman and chief executive officer Jamie Dimon said litigation charges will show up, in unpredictiable amounts, in the quarters ahead. Most of the legal expenses are associated with U.S. Justice Department claims of wrong-doing while problems surfaced at Bear Stearns and Washington Mutual, the two troubled banks that JPMorgan took over in the midst of the financial crisis.

"The Board continues to seek a fair and reasonable settlement with the government on mortgage-related issues - and one that recognizes the extraordinary circumstances of the Bear Stearns and Washington Mutual transactions, which were undertaken at the request or encouragement of the U.S. Government," Dimon said in a statement.

In the financial results broken down by unit, the consumer banking provided a boost with a 15% year-over-year jump in profit to $2.7 billion, even as its revenue sunk 13% to $11.1 billion. The volume of credit card sales spiked 11% to $107 billion. Mortgage-related net income grew 13% to $705 million.

In the corporate and investment bank division, client deposits rose 10% to $386 billion, while assets under custody reached a record $19.7 trillion. Revenue dipped 2% to $8.2 billion while profit climbed 12% to $2.2 billion.

In the commercial banking sector, revenue was flat year over year at $1.7 billion, while net income dropped 4% to $665 million.

In the asset management unit, client assets increased 11% to $2.2 trillion, while loan balances reached a record $90.5 billion and net long-term client flows came to $19 billion. Revenue rose 12% to $2.8 billion and net income increased 7% to $476 million.

On its balance sheet, JPMorgan maintained a Tier I capital ratio of 11.7% and Basel Tier 1 reserves of $145 billion.
Shares rose 1.4% in early trading, adding to a 20% rise so far this year.

Quick facts: JPMorgan Chase & Co

Price: 119.74 USD

NYSE:JPM
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Market Cap: $364.99 billion
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