JPMorgan’s woes drive first dip in US bank income in four years

Litigation expenses was main reason for the 4% overall drop – report

JPMorgan’s mounting legal bills have contributed to the first fall in US banks’ net income for more than four years. Photograph: Getty Images

JPMorgan’s mounting legal bills have contributed to the first fall in US banks’ net income for more than four years. Photograph: Getty Images

Wed, Nov 27, 2013, 01:00

JPMorgan’s mounting legal bills have contributed to the first fall in US banks’ net income for more than four years, according to a report released by the Federal Deposit Insurance Corporation yesterday.

FDIC-insured banks reported net income of $36 billion in the third quarter – $1.5 billion less than a year ago. And the first year-on-year fall since the second quarter of 2009.

Half of the 6,891 institutions insured by the FDIC reported earnings growth over the past year, while the other half reported falls. But the FDIC said JPMorgan’s litigation expenses were the big reason for the 4 per cent overall drop and, without these costs, the upward trend in bank earnings would have continued.

Legal costs are expected to have less impact on future net income, as JPMorgan and other US banks settle various cases. In October, JPMorgan reported its first loss since 2004 because of a $7.2 billion litigation hit from investigations into mis-selling mortgage-backed securities and other regulatory deals.

This month, the bank agreed to pay $13 billion in a mortgage securities settlement with the US Department of Justice. – Copyright The Financial Times Limited 2013