JPMorgan misses fourth quarter earnings expectations

by MPA14 Jan 2015
JPMorgan Chase & Co., the largest U.S. bank by assets, unveiled its fourth-quarter results, reporting a 6.6% drop in quarterly profit as legal expenses weighed the bank down. Kicking off fourth-quarter reporting season for financial services sector, JPMorgan also reported lower revenue from its mortgage business, with the national housing market recovery slowing down.

Mortgage activity for JPMorgan in the fourth quarter was mixed as originations at the bank were $23 billion, down 1% from the prior year and up 8% from the prior quarter.

JPMorgan reported net income for the fourth quarter of 2014 of $4.9 billion, compared with net income of $5.3 billion in the fourth quarter of 2013. Earnings per share were $1.19, compared with $1.30 in the fourth quarter of 2013. Revenue for the quarter was $23.6 billion, down 2% compared with the prior year. The bank had legal fees of $990 million in the fourth quarter

Net income for full-year 2014 was a record $21.8 billion, compared with $17.9 billion in the prior year. Earnings per share were $5.29 for 2014, also a record, compared with $4.35 for 2013. Revenue for 2014 was $97.9 billion, down 2% compared with 2013 revenue of $99.8 billion. The firm’s return on tangible common equity for the year 2014 was 13%.

“Our businesses continue to demonstrate strong momentum and expense discipline. Consumer & Community Banking delivered impressive growth in deposits and investment assets in the fourth quarter and throughout 2014, while outperforming its expense reduction target for the year," Jamie Dimon, CEO of JP Morgan said. "Mortgage originations improved sequentially in the fourth quarter, despite a seasonally slow quarter."

Mortgage banking net income was $338 million, a decrease of $255 million from the prior year, driven by higher provision for credit losses and lower net revenue, largely offset by lower noninterest expense. 

Mortgage servicing pretax income was $23 million, compared with $11 million in the year before, reflecting lower expenses, predominantly offset by lower revenue and lower MSR risk management income, according to JPMorgan. Mortgage net servicing-related revenue was $624 million, a decrease of $74 million from the prior year, driven by lower gains on excess interest-only securities and lower average third-party loans serviced, largely offset by higher gains on Government National Mortgage Association (Ginnie Mae) loan sales.


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