J.P. Morgan Chase & Co. first-quarter earnings tumbled 19%
as the bank grappled with weak trading revenue, overshadowing lower
expenses.
Results missed Wall Street estimates, sending shares down 2% in
recent premarket trading.
J.P. Morgan reported a profit of $5.27 billion, or $1.28 a
share, versus a profit of $6.53 billion, or $1.59 a share, a year
earlier. Revenue was down 7.7% to $23.86 billion.
Analysts polled by Thomson Reuters expected a per-share profit
of $1.40 on revenue of $24.53 billion.
Investors look to J.P. Morgan's results as a bellwether for the
rest of the banking industry, with the company's performance
demonstrating that despite signs of loan growth, large lenders
continue to struggle with a sluggish U.S. economy and the effect of
low interest rates on profits from lending, investing and
trading.
Revenue from fixed income markets--one of J.P. Morgan's
traditional strengths--was $3.76 billion, compared with $4.75
billion a year earlier and $3.2 billion in the fourth quarter.
J.P. Morgan was among a slew of banks that analysts had slashed
earnings estimates on in recent weeks, pointing to continued
weakness in fixed income trading revenue.
Expenses are another concern at J.P. Morgan as it works through
a number of government probes, lawsuits and regulatory orders
requiring changes to its policies and procedures. The bank added
7,000 to its compliance staff last year as it works to shore up
relationships with numerous U.S. regulators and beef up controls.
It expects to bring on an additional 3,000 this year. It also
intends to deploy an additional 8,000 employees across the firm to
root out money laundering.
For the latest period, J.P. Morgan said its noninterest expense
fell 5.1% from a year earlier to $14.64 billion.
In the first quarter J.P. Morgan said it had "no material"
litigation expense. That compares with a litigation expense of $300
million reported a year earlier and the $800 million reported in
the fourth quarter.
Last year marked record payouts for J.P. Morgan as it agreed to
more than $20 billion in legal settlements. Litigation expenses
ballooned to $11.1 billion, more than double the amount from 2012.
"The most painful, difficult and nerve-racking experience that I
have ever dealt with professionally was trying to resolve the legal
issues we had this past year," Mr. Dimon wrote in a letter to
shareholders released earlier this week.
Friday, Mr. Dimon in prepared remarks said he has "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."
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com and Dan
Fitzpatrick at dan.fitzpatrick@wsj.com
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