Boston, MA 01/16/2013 (wallstreetpr) – JPMorgan Chase & Co. (NYSE:JPM) issued a disappointing Q4 whereby profits dropped 7.3 percent. The bank’s performance was particularly affected by high legal costs which included misleading of investors into faulty mortgage-backed securities, market rigging and oversight to illegal activities spearheaded by Bernard Madoff.
By failing to post profit growth, the company ended a three-year streak of impressive annual earnings. This time around JPM posted net income of $5.28 billion or $1.30 per share. In a similar quarter a year before, the bank posted $5.69 billion or $1.39 a share. Analysts polled by Bloomberg expected the company to earn $1.37 per share on average.
Litigations
JPMorgan Chase & Co. (NYSE:JPM) continues to suffer from legal cost whereby it has so far paid more than $23 billion to settle legal cases. The company is hunted left, right and center for issues which center on irregular currency practices, transacting poor mortgage bonds and turning a blind eye to the Ponzi scheme of Mr. Madoff.
That the bank has management to post a profit under this stress condition is indicative of the fact that the management is getting a lot of things right especially in preparing the bank for the future.
Even the bank’s CEO Jamie Dimon has hailed the just released earning data, noting progress in litigation, control and regulatory. With most of these issues behind the bank, it expects the future to present few bumps, if any, to its profits.
Profitability
Although JPMorgan Chase & Co. (NYSE:JPM) remains the largest U.S. bank, it has lost the prestigious spot of being the most profitable bank. Fiscal 2013 has particularly played a big role in pulling the bank down as financial stress increased in the year.
Having posted more than 10 percent increase in earning, Wells Fargo Co. (WFC) now stands as the most profitable bank. WFC is hailed in that it managed to hand down huge gain in Q4 at a time when its main business – mortgage – is hurting.
While JPMorgan Chase & Co. (NYSE:JPM) failed to tick in Q4, the bank has good growth prospects this year.
