JPMorgan Chase & Co. (JPM) fourth-quarter profit fell 7.3% from the prior year due to some $1 billion in legal expenses and other issues, the company said early Tuesday. Still, its results beat analysts’ estimates for the fourth quarter of 2013.
For the full year, JPMorgan’s net income weakened 16% to $17.9 billion. As a result, it is no longer the most profitable U.S. bank: Wells Fargo & Co. (WFC) had $21.9 billion in annual earnings, a 16% improvement from 2012.
In the fourth quarter, Wells Fargo saw its net income improve 10% from last year, narrowly topping analysts’ estimates.
Both banks reported declining revenue, reflecting the tough mortgage market and other conditions that are affecting growth in the banking sector, analysts say, which should be reflected in other financial industry results to be reported over the next few weeks.
JPMorgan CEO Jamie Dimon says the bank is glad “to have put some significant issues behind us this quarter,” noting in a statement that “it was in the best interests of our company and shareholders for us to accept responsibility, resolve these issues and move forward.”
Revenue for the New York-based bank fell about 1% year over year to $24.1 billion. San Francisco-based Wells Fargo’s sales dropped roughly 5% to $20.7 billion during the quarter from $21.9 billion a year ago.
Dimon in the Rough
Earlier this year, the CEO shared the news that JPMorgan agreed to pay some $20 billion for legal settlements in 2013. Much of the fourth-quarter expense was tied to its failure to report suspicions of fraud by Ponzi-schemer client Bernard Madoff.
In some business areas, sales have been weakening. Investment banking fee revenue dropped 3% to $1.67 billion in the quarter, as debt-underwriting sales fell 19% from last year and advisory fees 7%. Plus, stock and bond trading revenue were flat in Q4’13.
JPMorgan had a $274 million pretax loss from its mortgage loans, compared with a year-earlier profit of $789 million. Still, equity underwriting revenue improved 65% to $436 million, and net income from consumer and community banking climbed close to 20% to $2.37 billion.