J. P Morgan Chase Friday reported lower earnings due to a drop in its mortgage and trading businesses as the US banking giant seeks to turn the corner after costly legal settlements. J. P Morgan, one of the first major companies to release first-quarter results, said net income was $5.3 billion, down 19 percent from a year ago. Key factors behind the decline included a big drop in mortgage banking income, lower earnings from fixed-income trading and a rise in provisions in case of credit losses.
The earnings translated into $1.28 per share, well below the $1.40 expected by Wall Street. Revenues came in at $23.86 billion, missing estimates of $24.53 billion.
J. P Morgan chief executive Jamie Dimon said the results were "good" given the industry-wide headwinds in trading and mortgages. "We have growing confidence in the economy - consumers, corporations and middle-market companies are in increasingly good financial shape and housing has turned the corner in most markets - and we are doing our part to support the recovery," Dimon said.
Net income in mortgage banking was $114 million, down $559 million from last year. The bank has projected lower mortgage income for the year and has trimmed staff handling mortgage finance.
Revenue from fixed-income trading fell 21 percent to $3.8 billion. J. P Morgan had signalled weak performance on its trading desk, but the figures were still weaker than many analysts expected.
Total loans for the nation's largest bank by assets edged higher by just 0.2 percent to $731 billion compared with a year ago.
The bank hiked its provision for credit losses to $850 million, up $233 million from last year.
J. P Morgan's disappointing first quarter followed a 2013 marred by huge legal settlements over J. P Morgan's mortgage practices prior to the 2008 financial crisis, a major trading scandal in the bank's London office and other controversies.
Dimon called the conditions of last year "painful and nerve-wracking" in a letter to shareholders this week. J. P Morgan chief financial officer Marianne Lake said Friday there was "no discernible driver" for the drop in fixed-income trading, a major part of the bank's business.
"It feels like the market consensus at the beginning of the year was set for a growth story that just didn't happen the way it was expected to," Lake said.
The bank did not offer an outlook on future financial results.
Shares of J. P Morgan fell 3.2 percent to $55.57 in late-morning trading, making it the weakest-performing stock on the Dow Jones Industrial Average.