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JPMorgan earnings drop on legal costs

10:09 AM, Jan 14, 2014   |    comments
(Photo: STAN HONDA AFP/Getty Images)
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USA TODAY - JPMorgan Chase kicked off bank earnings season Tuesday, reporting it earned $5.3 billion in the last three months of 2013, as settling its role in the Bernard Madoff scandal and other legal woes slashed profits at the world's largest bank.

New York-based JP Morgan's revenue was $24 billion, down 1% from last year. Profit was down about 7%. Adjusted profit of $1.40 a share beat the average analyst estimate of $1.35 a share, as compiled by Thomson Reuters. The bank earned $5.69 billion, or $1.39 a share, a year earlier.

The bank reported slowing growth in loan volume and fee income as mortgage refinancing slowed, in response to rising home-loan rates since spring. Plain-vanilla businesses like credit cards and commercial real estate lending did well, with credit-card chargeoffs declining, while private equity revenue plunged and investment banking fees fell 3% on weak bond underwriting. New mortgage origination dropped 54%, and the bank said it had reduced its mortgage unit's staff by 11,000 people during 2013.

The company set aside $1.1 billion, or 27 cents a share. for legal and settlement expenses in the fourth quarter.

"We are pleased to have made progress on our control, regulatory and litigation agendas and to have put some significant issues behind us this quarter,'' CEO Jamie Dimon said in a statement. "It was in the best interests of our company and shareholders for us to accept responsibility, resolve these issues and move forward.''

The bank has a strong quarter in bread-and-butter businesses, Raymond James analyst Anthony Polini said.

``It was a great quarter to build on,'' Polini said in an e-mail message. "Stronger than expected net interest income, margin, mortgage banking and loan growth. Core earnings per share were above the Street {estimates.''

(Copyright © 2014 USA TODAY)

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