JPMorgan Chase & Co. (NYSE:JPM) reported its third quarter 2014 financial results with less than expected profit margins. As per the disclosures, legal expenses are pinned responsible for lower profit margins amounting to $1 billion during the quarter.
The biggest U.S. bank reported net revenues of $25.2 billion along with net income of $5.6 billion for the quarter, which is a significant improvement when compared with $0.4 billion net loss in the same quarter last year. The biggest surprise came under its legal expense section with expenditure of $1 billion put aside to handle alleged rigging charges for foreign-exchange rates, said CFO Marianne Lake. She further added, “We continue to be focused and diligent on managing expenses.”
While discussing financial results, Jamie Dimon, CEO and chairman of JPMorgan Chase & Co. (NYSE:JPM), said,
“Our businesses continue to perform well. Consumer & Community Banking deposit growth led the nation as the FDIC reported Chase #1 in deposit growth for the third consecutive year. Our Card business delivered double-digit sales volume growth and Mortgage Banking continues to reposition the business and manage through cyclical-lows.”
When asked about the effect of the U.S. economy on its financial results, Dimon said,
“While challenges remain in the global economic recovery, the U.S. economy is an exception, showing signs of steady improvement. Corporate America is in good shape with strong balance sheets and employment trends continue to be positive.”
The litigation expense is a reason of worry for the bank as the litigate expenses of $7.2 billion last year lead JPMorgan Chase & Co. (NYSE:JPM) to announce its first loss after 2004. Chris Kotowski , Oppenheimer & Co. analyst, said, “The ongoing high level of litigation expense after last year’s … mega settlement is a bit disturbing. At some point, it ceases to become a ‘special’ item.”
The analysts expected better profit margins for the bank but its model of stability convinced them of its growth story. Simon Maughan, OTAS techonologies, London, said, “The headline numbers have come out slightly below expectations, but the model of stability is there, and that’s ultimately what you want from a bank.”
This article has been written by Prakash Pandey.