New York (AFP) - US banking giant JPMorgan Chase Tuesday reported a 7.3 percent drop in fourth-quarter earnings as executives said legal and regulatory costs could continue to weigh on results.
The largest US bank by asset said earnings were $5.3 billion in the fourth quarter, down from $5.7 billion a year ago.
Revenues of $24.1 billion were down 1.2 percent from the year-ago period.
Still, the results were a major improvement from the third quarter, when the bank suffered a rare loss due to a $9.15 billion charge to deal with legal regulatory problems.
The results translated into earnings of $1.30 cents per share. Excluding charges and other items, adjusted earnings came in at $1.40 per share, beating analyst expectations by five cents.
Net earnings for full-year 2013 were $17.9 billion, down nearly 16 percent from $21.3 billion in 2012.
JPMorgan has spent about $20 billion on settlements with US regulators since the beginning of 2013.
These have included $13 billion to settle charges that it misled investors on billions of dollars of mortgage-backed securities and about $1 billion to resolve charges of poor oversight related to the huge "London whale" trading loss.
The company Tuesday announced another charge for legal expenses, this time for $1.1 billion, including for settlements announced last week with the Department of Justice related to poor oversight of accounts by convicted fraudster Bernard Madoff.
JPMorgan's chief executive Jamie Dimon said he was pleased the company had decided "to accept responsibility, resolve these issues and move forward."
But bank officials stopped well short of saying they were home free on the regulatory front.
Dimon said in a conference call with reporters that some of the investigations of the company are "just beginning." He said it was too soon to predict that the bank would have a clean slate with regulators within a year.
"You're just going to have to wait and see," Dimon said.
JPMorgan in November disclosed that US and foreign regulators have expanded a probe into whether the bank's hiring practices in China and Hong Kong violated anti-bribery laws.
Chief financial officer Marianne Lake told reporters in the call that legal expenses were expected "to normalize and abate over time at lower levels." But while current legal reserves are adequate for known issues, "things could change," she added.
Dimon gave a fairly bullish outlook on the outlook for the US economy and JPMorgan's overall performance.
"We can be set pretty well to grow," Dimon told reporters. "The banking system is stronger, the economy is stronger. We should be seeing that in 2014."
Dimon said the bank's returns and profit margins are strong when compared with other large banks.
"If you look at underlying numbers, the company is doing really well," Dimon said.
Earnings for corporate and investment banking dipped to $858 million from $2.0 billion, in part due to a change in valuating derivatives and structured notes.
The bank described the shift as part of an "industry migration" toward incorporating the cost or benefit of funding into the valuation.
The bank reported another hit to new mortgages following the rise in interest rates. Mortgage originations were $23.3 billion, down 54 percent from a year ago.
However, the bank reduced its provision for loan losses on real estate by $950 million. Dimon cited the "enormous improvement" in credit quality.
The company's investment banking division saw a 19 percent drop of debt underwriting fees to $801 million. That was partially offset by a 65 percent rise to $436 million in equity underwriting fees.
A Morgan Stanley note described the results as "solid" given the "headwinds" facing the company. Citigroup characterized the results as "good" and predicted the stock would "modestly outperform" as a result.
Dow member JPMorgan shares were up 0.1 percent in midday trade.