JPMorgan Earnings Fall 18.5% on Slowdown in Trading and Mortgage Lending
Richard Drew/Associated Press
JPMorgan Chase reported an 18.5 percent slump in first-quarter earnings on Friday, as the nation's largest bank grappled with dual challenges: sluggish revenue from trading and lackluster mortgage lending.
Both issues, broadly buffeting the banking industry, damped profits at JPMorgan.
The net earnings of $5.27 billion, or $1.28 a share, came in slightly below Wall Street analysts' expectations of $1.40 a share on revenue of $24.53 billion.
Revenue dropped to $23.86 billion.
As the nation's largest bank, JPMorgan has become a kind of bellwether for the broader industry. The lukewarm results on Friday underscored how Wall Street has struggled to recoup the revenue drained from a slowdown in trading. Compounding the problem, revenue from underwriting bonds has also dipped in recent quarters.
At an investor conference in February, JPMorgan executives foreshadowed the slowdown predicting that revenue from trading would fall by roughly 15 percent from just a year earlier.
Ahead of the earnings, some bank analysts expected the trading woes to be aggravated as the nation's biggest banks adapt to the spate of rules on derivative trading.
For JPMorgan, the results also pointed to just how expensive it has been for the bank to win some kind of peace with Washington. All told, JPMorgan has paid roughly $20 billion in just the past 12 months to resolve a spate of government investigations.
Jamie Dimon, the bank's chief executive, discussed the steep price of reconciliation in his annual letter to shareholders. He also emphasized that negotiating settlements - including a $13 billion agreement with government authorities over the sale of mortgage securities in the years before the financial crisis - while trying to reduce risk, has been 'painful' and 'nerve-racking.'
In fact, in the third quarter of last year, the hefty legal costs led JPMorgan to report its first quarterly loss ever under Mr. Dimon's leadership.
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