JPMorgan Chase & Co on Friday reported lower earnings due to a drop in its mortgage and trading businesses as the US banking giant seeks to turn the corner after costly legal settlements.
JPMorgan, one of the first major US companies to release first-quarter results, said its net income was US$5.3 billion, down 19 percent from a year ago. Key factors behind the decline included a big drop in mortgage banking income, lower earnings from fixed-income trading and a rise in provisions in case of credit losses.
The earnings translated into US$1.28 per share, well below the US$1.40 expected by Wall Street. Revenues came in at US$23.86 billion, missing estimates of US$24.53 billion.
JPMorgan chief executive Jamie Dimon said the results were “good” given the industry-wide headwinds in trading and mortgages.
“We have growing confidence in the economy — consumers, corporations and middle-market companies are in increasingly good financial shape and housing has turned the corner in most markets — and we are doing our part to support the recovery,” Dimon said.
Net income in mortgage banking was US$114 million, down US$559 million from last year. The bank has projected lower mortgage income for the year and has trimmed staff handling mortgage finance.
Revenue from fixed-income trading fell 21 percent to US$3.8 billion. JPMorgan had signaled weak performance on its trading desk, but the figures were still weaker than many analysts expected.
Total loans for the US’ largest bank by assets edged higher by just 0.2 percent to US$731 billion compared with a year ago.
The bank hiked its provision for credit losses to US$850 million, up US$233 million from last year.
JPMorgan’s disappointing first quarter results followed a year marred by massive legal settlements related to the company’s mortgage practices prior to the 2008 financial crisis, a major trading scandal in the bank’s London office and other controversies.
Dimon called the conditions of last year “painful and nerve-wracking” in a letter to shareholders last week. JPMorgan chief financial officer Marianne Lake said on Friday that there was “no discernible driver” for the drop in fixed-income trading, a major part of the bank’s business.
“It feels like the market consensus at the beginning of the year was set for a growth story that just didn’t happen the way it was expected to,” Lake said.
The bank did not offer an outlook on future financial results.
Shares of JPMorgan fell 3.2 percent to US$55.57 in late-morning trading on Friday, making it the weakest-performing stock on the Dow Jones Industrial Average.