JPMorgan's Earnings And Revenue Down Due To "Industry-Wide Headwinds"

JPMorgan Chase reported a $5.3 billion profit and $23.9 billion in revenue, both missing analysts’ expectatations.

JPMorgan Chase CEO and chairman Jamie Dimon

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What many analysts expect to be a weak first quarter for Wall Street's earning got off to an even worse start, with the country's biggest bank, JPMorgan Chase, missing expectations on both revenue and profit. The bank reported revenue of $23.9 billion and net income of $5.27 billion, or $1.28 a share, well below analysts polled by Bloomberg expectations' of $1.38 a share of earnings. The results also reflected a less profitable business than a year ago, when the bank reported earnings of $6.53 billion, and $1.59 a share, 19% drop.

The decrease was driven by a dive of revenue, which fell 8%, or $2 billion from a year ago. Some of the biggest decreases in revenue were in the bank's bond and fixed income trading division, whose $3.8 billion in revenue was down 21% from the year before thanks to "weaker performance across most products and lower levels of client activity compared to a stronger prior year."

Analysts expect to see major declines in fixed income trading, once the lifeblood of big-bank profits, across Wall Street as the banks report their earnings for the year. Overall trading revenue was expected to decline about 15% for the bank.

JPMorgan is also one of the country's largest mortgage lenders and that business too saw large declines in revenue, as it has across the entire industry in the last year. JPMorgan's mortgage business had $514 million in revenue this quarter compared to $1.45 billion in the first quarter of last year, a 65% decrease.

"JPMorgan Chase had a good start to the year, given there were industry-wide headwinds in Markets and Mortgage," JPMorgan CEO Jamie Dimon said in a statement.

The fall in profits and revenue comes after a year that Dimon described in his shareholder letter as "the most painful, difficult and nerve-wracking experience that I have ever dealt with professionally was trying to resolve the legal issues we had this past year."

The bank continued its belt-tightening, with its total staffing falling to 247,000, down 8,900 from the same time last year. It paid its employees $7.86 billion, down from $8.4 in the first quarter of 2013. One area where the bank add no material expenses was in litigation.

Thanks to a $9.15 billion pre-tax charge in the third quarter of last year, the bank suffered its first loss under Dimon's watch. JPMorgan last year paid over $20 billion last year in settlements, fines, and compensation to investors to resolve legal issues stemming for its sales of mortgage-backed securities, the massive 2012 loss in a derivatives trades known as the "London Whale," and its banking relationship with Bernie Madoff. Its booked legal expense was $11.1 billion, which came straight out of its earnings. This quarter, any additional legal expense was not material to its earnings.

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