Boston, MA 04/11/2014 (wallstreetpr) – JPMorgan Chase & Co. (NYSE:JPM) has kicked off big bank earnings session in one of the most bizarre ways, after reporting lower than expected net income of $5.27 billion for the first quarter. Stocks in the U.S have consequently opened lower in the U.S with the Dow going down by 3.7% to $55.29. The drop in net income for the period can be attributed to the numerous litigation cases that the bank continues to grapple with.
JPMorgan Fails to Beat Estimates
The banks’ earnings per share for the period came in at $1.28 falling short of analyst expectations of $1.40. The banks’ profits were down compared to highs of $6.53 billion reported for the same period last year. The bad report by JPMorgan Chase & Co. (NYSE:JPM) is an indication of how U.S markets have become volatile in the recent past sure to affect other small entities in the industry.
Shares of JPMorgan are already 4.46% down having come from a tough year, where the bank was forced to pay up to $20 billion in legal settlements. The bank has continued to take big hits from private litigants in the recent past as well as from the federal government. The Bank’s CEO Dimon has already admitted that this is the darkest patch for the bank.
Biggest Challenges for JPMorgan
It awaits to be seen what will be the bank’s reaction to the slow bond trading that the bank continues to grapple with. The banking environment continues to become tougher greatly affecting the loan growth market of which banks have always benefited from. JPMorgan Chase & Co. (NYSE:JPM) is also grappling with a drop in its Mortgage originations which were down by 68% for the first quarter. Weak fixed income trading results also affected the bank in the first quarter.
A surge in expenses continues to hurt the bank’s bottom line especially with the ever increasing lawsuits and regulatory orders. The bank now plans to deploy an additional 8000 employees as a way of curbing money laundering in the bank. This will be an addition to the 7000 staff that the bank employed as it strives to shore relationships with various U.S regulators.
Positive signals for the first quarter included a 6% increase in average loan balances for the commercial banking unit.
