By STEVE ROTHWELL
2014-04-11 11:42 PM
NEW YORK (AP) -- JPMorgan Chase, the biggest U.S. bank by assets, said Friday its first-quarter earnings fell 20 percent, driven by a decline in investment banking and mortgage lending.
EARNINGS: The bank reported net income of $4.9 billion for the first quarter, after stripping out payments to preferred stockholders. That was down from $6.1 billion in the same period a year earlier.
MISSED EXPECTATIONS: On a per-share basis, the earnings amounted to $1.28. That was worse than estimates of analysts polled by FactSet, who had been expecting $1.39.
LOWER REVEUE: Revenue, after stripping out the effect of an accounting charge for credit losses, was $23.8 billion, down 8 percent from $25.8 billion a year earlier.
FIXED INCOME TRADING: Revenues at the bank's fixed income trading business, part of its investment banking unit, slumped 21 percent to $3.8 billion. Jamie Dimon, JPMorgan's CEO and Chairman said that the business was still performing well given the market environment.
"I look at it as doing fine, it's just not that predictable a business," Dimon said. "There's nothing wrong with that, you just have to deal with it over time."
MORTGAGE BUSINESS SLOWS: The bank's mortgage business continued to slow. The increase in bond yields since last summer has caused mortgage rates to rise, which in turn has slowed refinancing of home loans. Revenue at the bank's mortgage unit was $1.6 billion, down $1.1 billion from the same period a year earlier. The bank said mortgage originations plunged 68 percent to $6.7 billion, compared with the same period last year.
The bank doesn't expect the trend to change anytime soon. Chief Financial Officer Marianne Lake told reporters on a conference call to "expect that trend to be relatively consistent."
TRIMMING COSTS: Expenses at the bank fell 5 percent to $14.6 billion in the first quarter. JPMorgan said last month that it plans to eliminate 8,000 jobs this year as its mortgage business shrinks and it aims to control costs at branches.
BRIGHT SPOTS: Revenue from private banking rose 4 percent to $1.5 billion and auto loan originations rose 3 percent to $6.7 billion. Credit card sales volumes also grew.
THE QUOTE: Even though the bank had warned investors in February that trading revenues would be weak, the decline was still bigger than expected, said Jeff Morris, head of U.S. equities at Standard Life Investments.
"These results underscore that JPMorgan is a well-managed bank, but they can't decouple from the current economic and market environment," Morris said in emailed comments.
STOCK REACTION: JPMorgan fell $1.70, or 3 percent, to $55.70 in late morning trading Friday. The bank's stock has fallen 4.7 percent this year following a 33 percent rise in 2013.