JPMorgan Chase posted far weaker-than-expected quarterly profit as uncertainty about the US economy weighed on trading volumes and lending to consumers.
Results from the first of the major Wall Street banks to post earnings underscore how difficult the first quarter was for the financial sector.
JPMorgan’s bond trading revenue plunged 21 percent, and mortgage lending revenue fell 84 percent from the same quarter last year.
But most of the bank’s big businesses, including credit card and commercial lending, delivered lower profits.
Overall, net income fell 19 percent to $5.27 billion, or $1.28 per share, from $6.53 billion, or $1.59 per share, in the same quarter of 2013, the biggest US bank said on Friday.
Analysts on average had expected earnings of $1.40 per share, according to Thomson Reuters I/B/E/S. The net earnings for both the latest and prior quarters included special items.
Total net revenue fell 8.5 percent to $22.99 billion, falling well short of the average estimate of $24.53 billion.
JPMorgan’s shares, which recently topped $61 to trade at their highest level in 13 years, were down 3.5 percent at $55.39 in morning trading.
The disappointing report sent stocks sharply lower Friday, extending the previous day’s slide.
The Dow Jones industrial average dropped 103 points, or 0.6 percent, to 16,067 at the open, while the S&P 500 index lost 11 points, or 0.6 percent, to 1,822.
Chief Executive Jamie Dimon struck an upbeat note, however.
“We have growing confidence in the economy — consumers, corporations and middle market companies are in increasingly good financial shape and housing has turned the corner in most markets…,” he said in a statement.
When asked whether the bank would take more risk to boost revenue, Dimon said the bank does not change its underwriting standards to boost revenue.
“We feel really good about the risks we’re taking … for the future of the company,” he said on a conference call with journalists.
Dimon has been working to improve the bank’s profitability after net income dropped 16 percent last year due to massive legal settlements and rising costs to improve compliance with laws and regulations.
JPMorgan’s revenue from fixed income fell 21 percent to $3.8 billion in the quarter ended March 31, while revenue from equity markets fell 3 percent to $1.3 billion.
Some investors worry about how much of the big banks’ revenue streams from fixed-income trading have been lost forever as a result of changes ordered by regulators to make the banking system safer.
JPMorgan’s annual costs to comply with laws and regulations and control risk have increased by about $2 billion.
JPMorgan said its litigation expenses were immaterial in the latest quarter, under its “other corporate” accounting line.
Litigation expenses totaled $347 million in the year-earlier quarter and $847 million in the fourth quarter.
In the first quarter two years ago, litigation costs totaled $2.5 billion as the bank built up reserves in anticipation of big legal settlements that it ultimately reached in 2013.
JPMorgan paid more than $20 billion last year to resolve legal claims stemming from a wide range of problems, including its London Whale derivatives loss and its marketing of bad mortgage securities before the financial crisis.