Make us your home page
Instagram

JPMorgan Chase's quarterly profit falls 23 percent to $3.7 billion

JPMorgan Chase said Friday that its fourth-quarter profit fell 23 percent to $3.7 billion as it spend billions fighting suits.

Associated Press

JPMorgan Chase said Friday that its fourth-quarter profit fell 23 percent to $3.7 billion as it spend billions fighting suits.

NEW YORK — The economy may be healing, but banks are suffering from a housing hangover.

JPMorgan Chase spent $3.2 billion last year to fight lawsuits, almost all of them over poorly written mortgages. That was down from $5.7 billion in 2010, but it made clear that housing still haunts the bank, five years after the bubble burst.

The bank said Friday that it set aside $528 million in the last three months of 2011 to fight lawsuits. It also spent $925 million in the fourth quarter to carry out foreclosures and handle mortgage defaults.

"There's still a huge drag," CEO Jamie Dimon said. "I mean, you're talking about several billion dollars a year in mortgage alone."

The expenses took a bite out of JPMorgan's quarterly profit, which fell 23 percent from a year earlier, to $3.7 billion, and missed Wall Street expectations. Stocks across the banking industry declined as a result. It was the first time in four years that JPMorgan's quarterly earnings fell short of expectations.

For the full year, JPMorgan, the nation's largest bank, posted a record profit of $19 billion, up from $17.4 billion in 2010.

JPMorgan also took a hit because of choppy financial markets. It collected $1.1 billion in investment banking fees, down 39 percent from the year before. Its fees for underwriting debt fell 40 percent, and 65 percent for underwriting stock.

Stock market traders take their cue from the results of large banks like JPMorgan, which has 50 million customers. The results demonstrated that it remains unclear how long the mortgage problem will be a drag on the industry.

During the housing bubble last decade, the banks gave out mortgage loans without checking for documents that proved the borrowers had jobs, or could even pay their monthly bills.

The boom in so-called subprime lending was one of the causes of the financial crisis that erupted in the fall of 2008.

JPMorgan and other banks are being forced to buy back many of the soured loans that they sold to Fannie Mae and Freddie Mac, the government lenders, during the boom. In the last quarter, JPMorgan lost $390 million from the buybacks.

The bank's higher litigation expense does not bode well for Bank of America, which has been damaged far more than JPMorgan from lawsuits related to mortgages. Last year, Bank of America agreed to pay close to $13 billion to settle mortgage issues.

JPMorgan was the first major U.S. bank to report earnings. Citigroup, Bank of America, Wells Fargo, Goldman Sachs and Morgan Stanley all report next week.

JPMorgan Chase's quarterly profit falls 23 percent to $3.7 billion 01/13/12 [Last modified: Friday, January 13, 2012 10:40pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Associated Press.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Hurricane Irma thrashed Tampa Bay homes sales in September

    Real Estate

    Hurricane Irma not only downed thousands of trees throughout the Tampa Bay area: It also sent home sales plunging in September.

    This home on Tampa's Davis Islands home sold in September for $5.2 million, making it the priciest sale of the month in the Tampa Bay area.
[Courtesy of Judson Brady Photography]
  2. Florida unemployment rate drops despite huge loss of jobs

    Economic Development

    Florida lost a whopping 127,400 jobs last month as Hurricane Irma swept through, according to state figures released Friday.

    Florida's unemployment rate dropped from 4 percent in August to 3.8 percent in September. Pictured is 
Shantia Blackmon (left),from St. Petersburg, talking with Jocelyn Kelley from North Carolina at a Pinellas Schools County Job Fair in June. | [DIRK SHADD   |   Times]
  3. Hooper: Jean Chatzky chats about the intersection of wealth, health

    Personal Finance

    Public safety officials can readily identify a city's most dangerous intersections.

    Personal finance adviser Jean Chatzky is one of several high profile speakers on the slate for the Women's Conference of Florida in Tampa next week. [Handout photo]
  4. Trigaux: Amid wealth inequality, is middle class losing habit of giving to charities?

    Business

    In the slow economic recovery since the nasty recession a decade ago, researchers are wondering if the hard times back then broke middle class America's habit of charitable giving.

    Dr. Kiran Patel and his wife and fellow doctor Pallavi Patel rank among the most generous philanthropists in the Tampa Bay area in recent decades. Their most recent giving: a $200 million pledge, consisting of a $50 million gift to Nova Southeastern University, plus $150 million to buy and build a Nova-affiliated medical education complex in Clearwater. The Patels also have given considerable sums to the University of South Florida and area hospitals. In this 2014 photo, the couple pose for pictures on the green carpet prior to a 15th International Indian Film Academy Awards event in Tampa. [Times file photo]
  5. Tampa Bay's Top 100 Workplaces deadline extended to Nov. 17

    Business

    Think you work at one of the best places in Tampa Bay? You've got a little more time to make a pitch.

    Penny Hoarder and Gregory, Sharer & Stuart were among those at an event in Tampa last May honoring winners of the Tampa Bay Times Top Workplaces awards. Nominations are now open for this year.  
[OCTAVIO JONES   |   Times]