BusinessBanking & Finance

JPMorgan Chase profit jumps 53pc in fourth quarter

PUBLISHED : Wednesday, 16 January, 2013, 9:55pm
UPDATED : Wednesday, 16 January, 2013, 9:55pm

JPMorgan Chase said on Wednesday that its fourth-quarter profit had surged 53 per cent, capping a third straight year of record income for the US banking giant.

Net income grew to US$5.7 billion in the final quarter of last year from US$3.7 billion in the year-ago period, the largest US bank said.

For the full year, JPMorgan posted a record profit of US$21.3 billion, up from US$19.0 billion in 2011, and underscored what was the third year in a row of record profits.

Earnings of US$1.39 per share in the fourth quarter were well above the market consensus estimate of US$1.16.

“The firm’s results reflected strong underlying performance across virtually all our businesses for the fourth quarter and the full year, with strong lending and deposit growth,” Jamie Dimon, JPMorgan’s chairman and chief executive, said in a statement.

The blue-chip Wall Street firm reported fourth-quarter revenue of US$24.4 billion, up 10 per cent from a year earlier, and “flat” full-year revenue of US$99.9 billion.

The bank lowered its provision for credit losses by 70 per cent, to US$656 million last year.

Dimon’s last year bonus was slashed in half for the “London Whale” derivatives trade debacle by the bank’s Chief Investment Office (CIO) that racked up US$6 billion in losses in the first half of the year.

The firm’s board of directors approved an unchanged annual salary of US$1.5 million for Dimon and cut his bonus to US$10 million, compared with US$21.5 million for 2011.

The board “took into consideration both the continued strong performance of the firm, and the CIO losses, including Mr. Dimon’s responsibility as the firm’s chief executive officer,” JPMorgan said in a filing with the Securities and Exchange Commission (SEC).

The scandal was a humiliation for Dimon – one of Wall Street’s best-known titans – and for the bank, after it proudly came through the 2008 financial crisis in far better shape than its rivals.

The bank acknowledged the derivatives problem last May amid scrutiny of the actions of a CIO trader in London, Bruno Michel Iksil, nicknamed “the London Whale” because of his huge bets.

In the SEC filing, the board acknowledged the CIO losses were “a serious mistake” that the bank has learned from and taken actions to prevent.

“Importantly, once Mr. Dimon became aware of the seriousness of the issues presented by CIO, he responded forcefully by directing a thorough review and an extensive program of remediation,” the board said.

Shares in Dow member JPMorgan were down 0.2 per cent at US$46.25 in pre-market trading in New York.


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