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JPMorgan Chase & Co. (JPM), the biggest U.S. bank, said first-quarter profit fell 19 percent on lower revenue from fixed-income trading and mortgages, themes that may be repeated across Wall Street next week. The shares declined 2.9 percent.
April 11 -
JPMorgan Chase investment bank co-head Mike Cavanagh, one of the leading candidates to eventually succeed CEO Jamie Dimon, will become co-president of Carlyle Group. His departure is the latest, and one of the most serious, in a long string of recent senior-level exits from the country's largest bank.
March 25 -
Legal battles took a toll on JPMorgan Chase, but CEO Jamie Dimon is now urging investors to focus on the future. Among his top initiatives for 2014: making the most of big data and strengthening cybersecurity.
April 10 -
Regulators have reacted as expected, but large banks say theyre not vulnerable to the security flaw. Nonetheless, security questions remain.
April 11
If there's any fun to be had left in banking, don't expect Jamie Dimon to expound on it.
JPMorgan Chase's (JPM) profits and revenues
"Yeah," he ground out in a monotone voice, when asked during a conference call with reporters if he is still enjoying his work.
It was a noticeable reticence from Dimon, often the industry's loudest cheerleader, who as recently as February was telling investors he was "so damn proud of this company." It's also a telling example of how little fun most bankers are having at work these days and how the lackluster economy and changing regulatory environment are keeping them from enjoying the profits they once reveled in.
"Everyone's chasing a small amount of loan growth because there's just not that much to go around at this point," says Jason Ware, an analyst with Albion Financial.
Economic growth is happening in "these fits and starts, and there's nothing Jamie Dimon can do to control that," he adds. "It's got to be really frustrating."
To be sure, most of the big banks are still making money and leaders like Dimon are still reaping millions of dollars in compensation. JPMorgan Chase, under some of the harshest regulatory scrutiny in the country and exposed by its large investment banking division to an industry-wide slump in debt trading, still managed
Still, its profits were down 19% from a year earlier, while its revenue slipped 8%. Mortgages and fixed-income trading were particularly to blame; JPMorgan's net income from home lending fell 42%, while bond trading profit fell 21%.
The results disappointed analysts, who on average had expected the bank to earn $1.46 per share,
Meanwhile, rival Wells Fargo (WFC) reported a
"Loan growth was a little weaker than expected" at both Wells and JPMorgan, and both banks' dropoffs in mortgage production and servicing is "a pretty good indicator that we're going to see slow [first-quarter results] for the rest of the banks," says Erik Oja, an analyst at S&P Capital IQ.
After several quarters of results that were
Marianne Lake, JPMorgan's chief financial officer, blamed the bank's worse-than-expected results on what she called a challenging environment "from both a market and a mortgage perspective." That bodes ill for most commercial banks, including megarivals Bank of America (BAC) and Citigroup (NYSE:C), the latter of which is dealing with a new round of mounting regulatory scrutiny after failing part of the Federal Reserve's stress tests last month.
JPMorgan isn't out of the woods with its own regulatory run-ins either. Last year it paid more than $20 billion to settle regulatory and civil claims over a broad array of its operations, including mortgage securitizations and sales, energy trading, credit card debt-collection practices and its unshakeable London Whale trading mess. In an annual letter to shareholders
Lake told reporters Friday that, while legal expenses this quarter were immaterial, "this will likely be lumpy from quarter to quarter over the next couple of years."
Besides regulatory pressures, tepid economic growth, compressed interest margins and lackluster trading results, JPMorgan Chase and other banks are also facing a new wave of threats to their data security. Banks have spent several months trying to improve their cyber defenses after hackers stole massive amounts of customer information from Target. This week a widespread Internet security disaster, known as
Lake reiterated on Friday that JPMorgan Chase's external websites had not been affected by the Heartbleed flaw. But Dimon also acknowledged that he was increasingly worried about the mounting online threats to banks' data and customer information.
"Cybersecurity's a big deal," he told reporters. JPMorgan is spending more than $250 million annually this year to combat hacker attacks, and that investment "is going to go up every year," he added.