JPMorgan Earnings Dragged Down By Legal Expenses

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JPMorgan Chase & Co. (NYSE:JPM) released its fourth quarter earnings this morning before opening bell. The bank reported net income of $1.30 per share on $24.1 billion in revenue for the fourth quarter. Excluding items, the bank’s earnings would have been $1.40 per share. As has been the case over the last several quarters, legal expenses weighed on the bank’s earnings, this time, as the bank dealt with charges that it didn’t its suspicions about notorious Ponzi scheme operator Bernie Madoff.

Analysts had been expecting the bank to report earnings of $1.33 per share on $23.81 billion in revenue. In the same quarter a year ago, JPMorgan reported earnings of $1.39 per share. In premarket trading this morning, shares of JPMorgan declined 1% after this morning’s report.

Breaking down JPMorgan’s businesses

JPMorgan reported that average consumer and community banking deposits rose 8% and that its record client investment assets rose 19%. It also reported record credit card sales volume, which rose 11%, a 14% increase in merchant processing and a 16% increase in auto loan originations.

In corporate and investment banking, JPMorgan Chase & Co. (NYSE:JPM) kept its top ranking in global investment banking fees. Average client deposits rose 15%, and its record assets under custody were up 9%.

The bank also reported record gross investment banking revenue, which increased 13%, and an 8% increase in average loan balances. In asset management, JPMorgan posted positive net long-term client flows for the nineteenth quarter in a row. The bank also saw record client assets rise 12% and record average loan balances increase 21%.

JPMorgan reports items

During the fourth quarter, JPMorgan Chase & Co. (NYSE:JPM) reported a number of items. The bank reported that it gained $812 million or 21 cents per share after it sold its shares of Visa Inc (NYSE:V). It also saw a $306 million or 8-cent per share benefit after selling its property at One Chase Manhattan Plaza. The bank received a 20-cent per share or $775 million positive benefit from reduced reserves in its real estate portfolios and card services division.

JPMorgan reported $1.1 billion in legal expenses during the fourth quarter, which was 27 cents per share, and a negative impact of $1.2 billion or 32 cents per share from adjustments in funding valuation and debit valuation.

JPMorgan maintains balance sheet

JPMorgan Chase & Co. (NYSE:JPM) reported its Basel I Tier 1 common ratio as 10.7% or $149 billion. Its estimated Basel III Tier 1 common ratio was 9.5%. It also had $522 billion in “high quality liquid assets.”

For the full year, the bank reported net income of $17.9 billion, compared with $21.3 billion in 2012. Full-year 2013 earnings were $4.35 per share, compared to $5.20 per share for 2012. Full-year revenue for 2013 was $99.8 billion, which was nearly flat with the bank’s 2012 revenue of $99.9 billion.

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