NEW YORK -- JPMorgan Chase reported a 7 percent drop in fourth-quarter earnings Wednesday, hit by more legal costs and a drop in trading revenue.
JPMorgan, the biggest U.S. bank by assets, said it earned $4.93 billion, or $1.19 a share, for the three-month period ending in December. That compares with a profit of $5.28 billion, or $1.30 a share, a year ago.
The results were hit by a $990 million after-tax charge for legal expenses, more than analysts expected. The bank's results have been affected by various legal costs over the past several quarters as it has settled lawsuits with state and federal regulators over its role in the housing bubble and subsequent financial crisis.
In a conference call with reporters, JPMorgan Chief Executive Officer Jamie Dimon said investors should expect more legal expenses this year.
"Banks are under assault," Dimon said, noting that the bank has to deal with "five to six regulators" for every aspect of its legal issues.
Dimon, who previously blamed regulators for stifling economic growth, seemed to strike a more conciliatory tone last year. The bank had a "tin ear" when dealing with overseers before settling investigations into mortgage lapses and trading losses, he said in an April letter to shareholders.
"Our response generally was, 'We know what we're doing,'" Dimon wrote. "Well, we should have done more self-examination. We need to be better listeners."
New Federal Reserve rules that exceed the global standard could mean JPMorgan needs more than $20 billion in additional capital by 2019.
"The regulators clearly want even more capital," Dimon said. "We'll meet those requirements. But those measures aren't a measure of risk at all. It is simply a measure of size. This company is as sound as it gets."
Total revenue fell 3 percent to $22.5 billion from $23.2 billion a year ago.
JPMorgan's investment banking division was hit by the sale of its commodities trading division and a slowdown in bond trading, one of the bank's larger businesses. Fixed-income revenue fell 23 percent from the previous year to $2.5 billion.
In the bank's commercial banking division, which includes credit cards, checking accounts, mortgages and auto loans, there are signs that consumers are more willing to take on debt and are spending more.
Credit card balances were up 3 percent to $131 billion, while merchant processing volume, the amount of money spent on the bank's credit and debit cards, was up 13 percent from a year ago. The bank processed 10.3 billion transactions in the quarter, up 7 percent from a year ago.
The bank also had an 8 percent increase from the previous year in auto loan originations.
The results missed Wall Street expectations. The average estimate of analysts surveyed by FactSet was for earnings of $1.31 a share.
Despite JPMorgan's legal troubles, 2014 was a very profitable year for the bank. The company earned $21.8 billion last year, a 21 percent increase from JPMorgan's profit of $17.9 billion in 2013. The profit increase came despite revenue remaining mostly flat last year, at $94.2 billion from $96.6 billion a year ago.
The bank's stock fell $2.03, or 3.5 percent, to close Wednesday at $56.81.
Information for this article was contributed by Ken Sweet of The Associated Press and Hugh Son of Bloomberg News.
Business on 01/15/2015