JPMorgan Chase & Co. (JPM), the largest U.S. bank by assets, said fourth-quarter profit rose 53%, beating analysts' estimates as record low interest rates fueled mortgage lending.
Net income climbed to $5.69 billion, or $1.39 a share, from $3.73 billion, or 90 cents, in the same period a year earlier, the New York-based company said Wednesday. The results compared with an average per-share estimate of $1.22 excluding accounting adjustments and costs from a mortgage settlement projected by 28 analysts surveyed by Bloomberg.
"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," Chief Executive Officer Jamie Dimon, 56, said in the statement.
JPMorgan capped its third-straight year of record profits with $21.3 billion in net income, even after suffering its biggest trading loss ever. The bank faces regulatory sanctions and investigations by U.S. and international authorities stemming from the loss over a wrong-way bet on credit derivatives. The mistake cost JPMorgan more than $6.2 billion in the first nine months of last year.
The Federal Reserve and Office of the Comptroller of the Currency took the first regulatory actions against the bank for the trade on Jan. 14, ordering it to strengthen risk controls and enhance executive pay practices. The board of directors was also told to take into consideration control weaknesses and"adverse risk outcomes" in deciding compensation for Dimon and other top managers.
The U.K.'s Financial Services Authority, which regulates banking activity there, announced its own inquiry into the trading loss this week.
Dimon ousted the three London traders who were responsible for the loss, shuffled senior managers and accepted resignations from other executives.
Mortgage litigation stemming from the housing crisis also continues to plague the company. JPMorgan took a one-time pretax charge of $700 million in the fourth quarter to cover the costs associated with a $2 billion settlement of mortgage abuse allegations by the Fed in a deal announced Jan. 7.
Those losses were offset by federal programs that encouraged mortgage lending, increasing the bank's profit and helping Dimon boost investor confidence.
JPMorgan shares advanced 8.6% in the quarter and 32% for all of 2012, compared with gains of 3.4% and 30%, respectively, for the 24-company KBW Bank Index.
Residential mortgage volume rose an estimated 42% to $511 billion in the fourth quarter from a year earlier as new government refinancing incentives took hold, according to estimates from the Mortgage Bankers Association. Corporate bond issuance surged 42% to $991.9 billion in the fourth quarter, data compiled by Bloomberg show, as the Federal Reserve's attempt to stimulate the economy pushed interest rates to historic lows.
The banking industry has been cutting staff and reducing expenses to offset slowing global growth, compressed profit margins on lending and low yields on investments. JPMorgan last week dismissed 839 mortgage workers that specialized in foreclosure reviews, a sign the economy is improving as the bank needs fewer people to help troubled borrowers, according to Amy Bonitatibus, a JPMorgan spokeswoman.
Lending at U.S. banks rose 1.6% in the fourth quarter from the previous three months, according to Federal Reserve data.
