Published January 16, 2013
J.P. Morgan Chase (JPM) reported stronger-than-expected fourth-quarter earnings on Wednesday but halved CEO Jamie Dimon's bonus after a task force called the London Whale trading debacle a “serious mistake” by the firm.
The New York-based bank, which released the results of an internal investigation into the second-quarter trading scandal on Wednesday, said it earned $5.7 billion last quarter, or $1.39 a share, up 53% compared with a year-earlier $3.7 billion, or 90 cents.
The results, driven by increased mortgage lending and a decline in bad loans, topped average analyst estimates of $1.16 a share in a Thomson Reuters poll. The company also reported record full-year earnings.
However, Dimon's pay was cut to $11.5 million from $23 million a year ago in the aftermath of the Whale trade and the bank's board said it will continue to oversee the firm’s remediation efforts.
Dimon’s reputation took a hit last year on the wrong-way trade executed by the CIO office in London that has so far cost the Wall Street giant $6.2 billion.
“As chief executive officer, Mr. Dimon bears ultimately responsibility for the failures that led to the losses in CIO,” the task force said in the report.
Dimon said he “respects” the board’s decision.
Other recommendations from the board include revamping governance, improving risk management and implementing control processes of the CIO.
Shares of the largest U.S. bank ticked down about 1% to $45.90 early Wednesday.
During the fourth quarter, revenue grew 10% to $23.6 billion but missed the Street’s view of $24.42 billion
J.P. Morgan said consumer and business banking deposits were up 10%, while business banking loan growth grew 7% to $18.9 billion and mortgage banking origination climbed 33% to $51.2 billion.
In its corporate and investment bank, assets under custody increased 12% to $18.8 trillion and J.P. Morgan's provision for credit losses fell 70% to $656 million.
Dimon said the bank saw favorable credit conditions across its wholesale loan portfolios.