The Wall Street Journal reported over the summer that JP Morgan is expected to settle in coming weeks with the Securities and Exchange Commission and Commodity Futures Trading Commission for more than $US150m regarding whether the bank steered a few clients into its own investment products without proper disclosures.
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JP Morgan’s chief executive Jamie Dimon said in a statement: “We had decent results this quarter”.
Its consumer business – its largest division – saw revenues fall 4% due largely to poor mortgage returns, although it lifted earnings by 4%. However, it did receive tax benefits of $2.2bn. The last time assets declined at the bank by that much was in early 2009, during the financial crisis.
Figures posted overnight after U.S. markets closed showed a 22% rise in underlying profits to $6.8bn (€5.95bn), but the figure missed market forecasts as revenue declined across its commercial and consumer banking business.
A $1.7 billion profit in the firm’s corporate unit bolstered the bottom line, thanks to a tax benefit of $1.9 billion. The bank posted income of $23.5bn, down from $25bn in the same period a year ago. It will be followed by Bank of America Corp. and Wells Fargo & Co. on Wednesday and Citigroup Inc. and Goldman Sachs Group Inc. on Thursday. In total, the company recorded $2.2 billion in tax benefits during the quarter, or $0.57 per share. And that the balance of those loans was up 13%. It also suffered legal costs worth $1.3bn during the quarter. In May, The Wall Street Journal reported the bank began to eliminate more than 5,000 jobs as it looks to save on expenses.
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The reduction of the deposits and assets, which include loans and trading positions, are created to help the bank meet new regulatory requirements, including the capital surcharge and the liquidity-coverage ratio, which aims to make sure banks have enough stable funding for a crisis. For the year, they are down 1.7 per cent compared with a 5.1 per cent decrease in the KBW index of bank stocks over the same period.
