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. 'Road to Nowhere' is back: Next phase of Suncoast Parkway coming

    Roads

    Despite intense public opposition and dubious traffic projections, the Florida Department of Transportation has announced that construction of the toll road known as "Suncoast 2" is expected to start in early 2018.

    The Suncoast Parkway ends at U.S. 98 just south of Citrus County. For years residents have opposed extending the toll road, a project dubbed the "Suncoast 2" into Citrus County. But state officials recently announced that the Suncoast 2 should start construction in early 2018. [Stephen J. Coddington  |  TIMES]
  2. A sports rout on Wall Street

    Retail

    NEW YORK — Sporting goods retailers can't shake their losing streak.

  3. Grocery chain Aldi hosting hiring event in Brandon Aug. 24

    Retail

    BRANDON — German grocery chain Aldi is holding a hiring event for its Brandon store Aug. 24. It is looking to fill store associate, shift manager and manager trainee positions.

  4. Lightning owner Jeff Vinik backs film company pursuing global blockbusters

    Corporate

    TAMPA — Jeff Vinik's latest investment might be coming to a theater near you.

    Jeff Vinik, Tampa Bay Lightning owner, invested in a new movie company looking to appeal to a global audience. | [Times file photo]
  5. Trigaux: Look to new Inc. 5000 rankings for Tampa Bay's future heavyweights

    Business

    There's a whole lotta fast-growing private companies here in Tampa Bay. Odds are good you have not heard of most of them.

    Yet.

    Kyle Taylor, CEO and founder of The Penny Hoarder, fills a glass for his employees this past Wednesday as the young St. Petersburg personal advice business celebrates its landing at No. 25 on the 2017 Inc. 5000 list of the fastest growing private companies in the country. Taylor, still in his 20s, wins kudos from executive editor Alexis Grant for keeping the firm's culture innovative. The business ranked No. 32 last year. [DIRK SHADD   |   Times]