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JPMorgan Chase's CEO spent a year shaking up the bank's top ranks after the London Whale trading losses came to light. He acknowledged Wednesday that there was "too much" management volatility.
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JPMorgan Chase & Co. said fourth-quarter profit rose 53%, beating analysts' estimates as record low interest rates fueled mortgage lending.
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Jamie Dimon got a 53.5% pay cut for 2012 after presiding over the London Whale's losses, but he will still bring home a $1.5 million salary and a $10 million deferred bonus.
January 16
Dark clouds — Chief Executive Jamie Dimon's
Profit grew, year over year, in most business units. Deposit balances rose. Mortgage volume climbed, excluding costs to settle foreclosure litigation.
JPMorgan should benefit this year from rebounds in lending and investment banking, though other problems will persist, said Richard X. Bove, an analyst at Rafferty Capital Markets. Those problems, many tied to low rates and a still tepid economy, are the medicine that most banks will have to swallow along with incremental advances in the months ahead.
"Traditional banking seems to be moving forward somewhat," Bove said. "Margins are still going to be lower. Net interest income will still be under pressure."
Chase shares rose 0.2% to $46.45 in Wednesday morning trading.
Strong fundamentals propelled JPMorgan to
"The numbers are really good," Dimon said in a conference call with analysts. "Look at the underlying details of this company. [We posted] 15% return on tangible common equity."
Dimon and Chief Financial Officer Marianne Lake, handling quarterly earnings for the first time in her new role, were positive about JPMorgan's results. But not everyone could see past its dark clouds. Mike Mayo, an analyst with CLSA, put Dimon on the defensive when Mayo pointed out that JPMorgan has undergone "radical" changes since the London Whale incident in its Chief Investment Office (CIO), including
"Does the [
"Obviously, when you have a problem like the Whale, you have mistakes, which you should acknowledge and then fix," Dimon said in response. "We obviously fixed CIO totally 100%."
Dimon may have been touchy because the
Big changes prompted by the London Whale incident include
"These are long tenured, very good, respected employees," Dimon said during the call.
Dimon led off two conference calls Wednesday, one with analysts and another with news media, by thanking Braunstein for his "service" to JPMorgan during a period when it reported "three record years of net income."
JPMorgan has been reliving the bad publicity it endured last year from the Whale losses and other matters.
Regulators this week unveiled enforcement orders cracking down on JPMorgan's trading and anti-money-laundering controls. However, some outside observers have described the actions as no more than a "
Separately, it
JPMorgan noted in its fourth-quarter earnings report that its final total loss for 2012 in its synthetic credit portfolio was $6.2 billion.
All the noise aside, Dimon and Lake bragged about JPMorgan's performance and outlook. Although Dimon said income from refinancings, which comprised 55% of its mortgage business in the fourth quarter, "over time will come down," mortgages are providing a big boost to JPMorgan,
"Housing has turned," Dimon said during the conference call with news media. "[New housing] starts … reductions in foreclosures … the whole gamut has changed."
Mortgage originations rose 33% to $51.2 billion, from a year earlier. Pretax income from mortgage production rose 390% to $789 million. Reduced loan-loss reserves for mortgages in its real estate portfolio contributed $700 million to earnings, or 11 cents per share.
Not all measurements of the mortgage business were positive. Total revenue from mortgage fees and related income fell 17%, to $2.04 billion, in the fourth quarter from the previous quarter. Still, it was an improvement from the fourth quarter of 2011, when revenue was $725 million.
Deposit-gathering was also strong in the quarter, which Chase plans to deploy in loans through its
"We are continuing to grow our deposits very strongly," Lake said. "We are continuing to grow our loans very strongly."
Bove chided JPMorgan Chase on its performance in