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Legal costs and fines hit JP Morgan's earnings Legal costs and fines hit JP Morgan's earnings
(35 minutes later)
A wave of legal costs and regulatory penalties has dented the profitability of America's biggest bank JP Morgan and ended a run of record earnings.A wave of legal costs and regulatory penalties has dented the profitability of America's biggest bank JP Morgan and ended a run of record earnings.
In the first of this week's results reports from the major US banks JP Morgan admitted its full year profits last year had fallen 16% to $18bn after a year in which it had paid out penalties of around $20bn.In the first of this week's results reports from the major US banks JP Morgan admitted its full year profits last year had fallen 16% to $18bn after a year in which it had paid out penalties of around $20bn.
Goldman Sachs, Morgan Stanley and Bank of America report later this week.Goldman Sachs, Morgan Stanley and Bank of America report later this week.
The JP Morgan fines related to the subprime mortgage crisis and its London Whale trading incident in 2012, and Jamie Dimon, who is both chairman and chief executive of the bank, said he was pleased to put "some significant issues behind us this quarter" after reaching settlements with regulators.The JP Morgan fines related to the subprime mortgage crisis and its London Whale trading incident in 2012, and Jamie Dimon, who is both chairman and chief executive of the bank, said he was pleased to put "some significant issues behind us this quarter" after reaching settlements with regulators.
The bank revealed that despite the profits slump the average pay for its 251,000 staff was $122,653 in 2013 – up from $118,000 a year earlier – although within its investment banking arm the average pay of $207,368 was down 5% on 2012.The bank revealed that despite the profits slump the average pay for its 251,000 staff was $122,653 in 2013 – up from $118,000 a year earlier – although within its investment banking arm the average pay of $207,368 was down 5% on 2012.
The most recent penalty came last week when it paid a record $2bn to settle charges it had knowingly ignored evidence that convicted fraudster Bernard Madoff's massive Ponzi scheme was "too good to be true." The most recent penalty came last week when it paid a record $2bn to settle charges that it had knowingly ignored evidence that convicted fraudster Bernard Madoff's massive Ponzi scheme was "too good to be true."
"It was in the best interests of our company and shareholders for us to accept responsibility, resolve these issues and move forward. This will allow us to focus on what we are here for: serving our clients and communities around the world. We remained focused on building our four leading franchises, which all continued to deliver strong underlying performance, for the quarter and the year," he said. "It was in the best interests of our company and shareholders for us to accept responsibility, resolve these issues and move forward," Dimon said. "This will allow us to focus on what we are here for: serving our clients and communities around the world. We remained focused on building our four leading franchises, which all continued to deliver strong underlying performance, for the quarter and the year."
In the fourth quarter profits fell by 7% to $5.3bn after taking a knock from $1.1bn of legal expenses. But in the third quarter the bank had slumped to its first quarterly loss under Dimon as a result of $9.2bn of legal expenses.In the fourth quarter profits fell by 7% to $5.3bn after taking a knock from $1.1bn of legal expenses. But in the third quarter the bank had slumped to its first quarterly loss under Dimon as a result of $9.2bn of legal expenses.
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