NEW YORK (AP) — 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.
The bank reported net income of $5.28 billion in the last three months of 2013, down from $5.69 billion in the same period a year earlier.
On a per-share basis, JPMorgan said it earned $1.30 a share in the quarter, compared with $1.39 a share a year earlier. The bank's revenue fell 1 percent to $24.1 billion.
LEGAL WOES CONTINUE: 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 $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 $1.7 billion to settle criminal charges stemming from its failure to report its concerns about Madoff's private investment service.
TIME TO 'MOVE FORWARD': "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.
DECLINE IN INVESTMENT BANKING: 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.
MORTGAGE BUSINESS SLOWS: 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.
DIMON EXPECTS MORE SECURITY BREACHES: 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. The Target breach presents an opportunity for retailers and the banking industry to work together to find solutions to stop this from happening again, he said.
PROFIT COMES AFTER 3Q LOSS: The bank's mounting legal costs have weighed on JPMorgan's earnings all year long. In the third quarter, the bank set aside $9.2 to cover a string of litigation stemming from the housing crisis and the bank's "London Whale" trading debacle. The legal expenses caused the bank to report a quarterly loss for the first time in a decade.
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