Big legal costs dent JPMorgan's profits

JPMorgan Chase Wednesday reported a dip in fourth-quarter earnings as hefty legal expenses once again weighed on results.

Quarterly earnings at the biggest US bank by assets fell 6.6 percent from the year-ago period to $4.9 billion. Quarterly revenues dropped 2.8 percent to $22.51 billion.

The bank recorded a $990 million charge for legal expenses. JPMorgan in October was fined about $78 million by the European Commission for rigging interest rates.

The bank has also acknowledged a criminal probe by US prosecutors into its foreign exchange business. JPMorgan reached a settlement in a class-action suit over its forex trades, a source told AFP earlier this month.

Huge legal charges have weighed on earnings over the last few years, even pushing JPMorgan to a rare loss in the 2013 fourth quarter.

"Obviously, companies make mistakes," JPMorgan chief executive Jamie Dimon said on a conference call with reporters. "We try to resolve it."

Dimon said banks are "under assault" by regulators, with five or six agencies typically punishing companies in cases that once would have only led to rebukes from one or two.

JPMorgan's biggest division, consumer and community banking, saw earnings drop about 11 percent to $2.2 billion, in part due to higher provisions for credit losses in some segments.

On the positive side, JPMorgan reported higher car loans and credit card loan balances, a sign of rising consumer confidence.

"Definitely it's the case that we're seeing strong spend," said JPMorgan chief financial officer Marianne Lake.

Corporate and investment banking earnings rose 3.3 percent to $972 million as strong debt underwriting fees offset declines in equity underwriting fees.

Dimon acknowledged that the big drop in oil prices adds pressure to housing markets in Texas and other petroleum centers and that there will probably be higher defaults in loans from some oil companies.

But he expects higher consumer spending due to cheap oil.

"There are offsets to the negatives in the oil sector," Dimon said.

Bank officials remain confident in the US recovery and in the bank's ability to benefit when the Federal Reserve raises interest rates, which Lake said is expected in June or soon thereafter.

Annual earnings came in at a record $21.8 billion, up 21.4 percent from 2013's profits.

"Our businesses continue to demonstrate strong momentum and expense discipline," Dimon said.

"Each of our businesses and the company are very well positioned going into 2015 for long-term growth and success."

The quarterly results translated into earnings per share of $1.19, below the $1.31 projected by analysts.

Dow member JPMorgan's shares tumbled 4.5 percent to $56.16 in mid-morning trade.