Jamie Dimon's bank posted a loss due to government suits. But investors cheered the news. Huh?
NEW YORK (CNNMoney)
The bank's legal tab for the third quarter was $7.2 billion after taxes. Dimon said the bank's results were "marred" by the legal expenses and warned that litigation costs could continue to be a drag on earnings for several quarters.
But Dimon also noted the bank "had strong underlying performance across the business."
Excluding its legal tab, JPMorgan Chase reported a quarterly profit of $1.42 per share, easily beating Wall Street's forecasts. And investors focused more on that than the loss. Shares of JPMorgan Chase (JPM, Fortune 500) rose nearly 1.5% in pre-market trading Friday.
Related: JPMorgan working to contain damage as massive settlement looms
Beating a low bar: Analysts had been expecting a relatively weak quarter for JPMorgan Chase beyond the legal costs because of a slowdown in mortgage lending and bond trading.
The bank took a hit in both of those businesses, which is a big reason that overall revenues fell to $23.9 billion in the quarter from $25.9 billion a year ago.
As interest rates rose this summer on fears that the Federal Reserve might cut its bond buying program, mortgage refinancing activity slowed down dramatically. That helped lead to a drop in revenue and net interest income in JPMorgan Chase's mortgage business from a year ago.
Still, JPMorgan Chase reported strong results from its investment banking division, as the bank generated more fees from underwriting new stock and bond offerings.
Related: JPMorgan's Dimon meets Holder for settlement talks
Legal woes multiply: The bank still faces many legal headaches. JPMorgan Chase is currently in negotiations with the Justice Department on a potential settlement for its sale of mortgage-backed securities ahead of the financial crisis. The Justice Department is seeking to levy a fine of at least $11 billion.
If successful, this would be one of the largest fines in history. Chief financial officer Marianne Lake declined to comment on pending litigation during a call with reporters Friday morning.
But the bank noted that it is holding $23 billion in reserves for potential litigation expenses. In a footnote to its SEC filing, the bank said legal costs could be nearly $6 billion above that figure in a worst case scenario.
Dimon has been lauded for keeping JPMorgan Chase profitable during the financial crisis and for rescuing Bear Stearns and Washington Mutual with the help of the government during the financial crisis. But he's now in unfamiliar territory. In addition to the government lawsuits, some shareholders are wondering if Dimon's reputation has now been tarnished.
Just last month, JPMorgan agreed to pay $920 million in fines over last year's "London Whale" trading debacle, and $80 million more over allegedly unfair credit card billing practices.
In July, the bank agreed to pay $410 million to settle charges that it manipulated electricity prices in California and the Midwest. It is also facing scrutiny over its hiring practices in China and its alleged involvement in the Libor rate-fixing scandal.
Despite the legal concerns, the bank's stock is up nearly 20% in 2013. Bank stocks have been market leaders this year and JPMorgan Chase is the first major financial firm to report its results.
Wells Fargo (WFC, Fortune 500) released its third quarter earnings Friday morning as well. Earnings topped expectations, but the stock fell in early trading due to concerns about a drop in mortgage volume.
Bank of America (BAC, Fortune 500), Citigroup (C, Fortune 500), Goldman Sachs (GS, Fortune 500) and Morgan Stanley (MS, Fortune 500) will report next week.
First Published: October 11, 2013: 7:38 AM ET
Anda sedang membaca artikel tentang
JPMorgan posts loss on big legal costs, but ...
Dengan url
https://ponselkuirit.blogspot.com/2013/10/jpmorgan-posts-loss-on-big-legal-costs.html
Anda boleh menyebar luaskannya atau mengcopy paste-nya
JPMorgan posts loss on big legal costs, but ...
namun jangan lupa untuk meletakkan link
JPMorgan posts loss on big legal costs, but ...
sebagai sumbernya
0 komentar:
Posting Komentar