JPMorgan Chase earnings miss estimates; mortgages, trading weaker

Weakness in the mortgage and bond-trading businesses socked JPMorgan Chase & Co. with disappointing first-quarter earnings, a signal that the start of this year was a tough time for the banking industry.

JPMorgan, the nation's largest bank, is trying to regain momentum after making record legal settlements in late 2013. It reported Friday that it earned $5.27 billion, or $1.28 per share, down 19% compared with $6.53 billion, $1.59 per share, in the first quarter of last year. Revenue fell 8% to $23.9 billion.

Wall Street had expected a profit of $1.40 per share at JPMorgan Chase on $24.5 billion in revenue.

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Chief Executive Jamie Dimon called the results "a good start to the year, given there were industry-wide headwinds" in fixed-income markets and mortgages.

"We have growing confidence in the economy," Dimon said in a statement announcing the results. "Consumers, corporations and middle market companies are in increasingly good financial shape and housing has turned the corner in most markets."

But the stock was down $2.05 at $55.35 in pre-market trading Friday, a 3.6% decline.

Dimon's bank weathered the 2007 mortgage meltdown and 2008 financial crisis with less damage than rivals, and for years seemed less exposed to allegations of financial negligence and fraud.

But last year a series of enormous legal settlements tarnished that image and dealt the bank a $380 million loss in the third quarter, its first quarterly deficit in Dimon's eight-year tenure as chief executive. 

The settlements included $13 billion to the Justice Department, Freddie Mac and Fannie Mae over mortgage-backed securities; $4.5 billion to certain investors in faulty mortgage bonds; and more than $2 billion to the government over the bank's failure to blow the whistle on megafraud perpetrator Bernie Madoff.

JPMorgan also agreed to pay $920 million, plus make a rare admission of wrongdoing, to settle regulatory probes into the "London Whale" trading debacle, which cost the bank $6 million in losses.


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