Banking giant JP Morgan has announced a surprise loss in the third quarter, following legal expenses of $7.2bn (£4.5bn).
Net loss was at $0.4bn (17 cents a share) whilst revenue was $23.1bn (£14.5bn) versus $26bn last year. The bank is still in $11bn settlement talks with US regulators over mis-selling of mortgage-backed securities pre-the financial crisis.
This is JP Morgan's first loss under chief executive Jamie Dimon, who has been at the helm throughout the embarrassing financial scandals that triggered it. Ishaq Siddiqi of ETX Capital says:
Reputation of course, takes a bit of knocking but more so of Jamie Dimon, less so the bank itself. Though he’s steered JPM into financial stability since the financial crisis of 2008, Dimon’s lack of oversight of certain operations do raise questions over his future at JPM. The fact that he’s still the boss at JPM, when you compare him to say former Barclays CEO, Bob Diamond, who resigned in the wake of the libor scandal last year which saw the bank pay a penalty of £290 million, one cannot help wonder why Dimon is getting away unscathed without dismissal by his board?
It must be noted that with JPM’s market cap is near $200billion, these legal charges can be absorbed without material impact to 2014 FY earnings. So long as they pay the bills, the market isn’t too concerned about JPM’s future – the shares are responding to just that by trading higher on Wall Street.
Excluding litigation costs, the bank saw a third quarter net income of $5.8bn (£3.6bn) and revenue of $23.9bn (£14.96bn).