JPMorgan Posts Third-Quarter Net Income of $5.6 Billion

By Hugh Son and Jon Menon

JPMorgan Chase & Co. (JPM), the biggest U.S. bank, swung to a third-quarter profit from a year-earlier loss, while setting aside $1 billion for legal expenses.
Net income was $5.6 billion, or $1.36 a share, compared with a loss of $380 million, or 17 cents, a year earlier, the New York-based bank said today in a statement. Earnings were cut by 26 cents a share as the firm set aside funds for legal costs. Analysts had estimated adjusted earnings of $1.39 a share.
Chief Executive Officer Jamie Dimon, 58, has spent the past two years working to resolve a jump in regulatory probes only to find a new challenge: his health. Dimon last month completed eight weeks of treatment for throat cancer, a condition he disclosed in July, and may address questions about his prognosis today. Other issues facing the bank include how
it’s navigating Wall Street’s slowdown in bond trading.
“Despite challenges, we have continued to deliver strong underlying performance, maintain our fortress balance sheet and liquidity, simplify the business and adapt to regulatory changes,” Dimon said in the statement.
Revenue in the quarter rose 5.4 percent to $25.2 billion. Fixed-income trading revenue rose 2 percent to $3.5 billion, fueled by strength in currencies and emerging markets, beating the $3.2 billion estimate from David Konrad, Macquarie Group Ltd.’s head of U.S. bank research.

Photographer: Andrew Harrer/Bloomberg

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Cyber Security

JPMorgan, the biggest fixed-income trading firm, is grappling with sluggish activity in that market caused by central bank intervention. While Chief Financial Officer Marianne Lake has said low client volume will probably continue through the middle of 2015, fixed-income trading may have gotten a boost as volatility increased in the final weeks of the quarter.
Last week, Dimon made his first public appearance since getting treated, saying JPMorgan will probably double its $250 million annual cyber-security budget within five years. The bank disclosed Oct. 2 that hackers had obtained contact information of 76 million households and 7 million small businesses, while adding that account numbers and passwords weren’t compromised.

‘Shockingly Present’

Dimon has been “shockingly present” at the bank’s New York offices during his treatment and heavily involved in management, Lake said in a Sept. 9 conference. The company is prepared for any scenario, Dimon said in July.
JPMorgan’s quarterly loss a year ago, caused by $7.2 billion in legal and regulatory expenses, was the sole deficit reported by the bank since Dimon took over in 2006.
Citigroup Inc. (C), the third-largest U.S. bank, and Wells Fargo & Co. (WFC), the biggest mortgage lender, report results later today. Bank of America Corp., Goldman Sachs Group Inc. (GS) and Morgan Stanley report later this week.
Fueled by JPMorgan’s rebound, the six banks probably will post $15.9 billion in combined third-quarter profit, a 19 percent increase from the previous year, according to the average of analysts’ estimates compiled by Bloomberg.