JPMorgan profit weaker than expected as trading revenue falls

According to an article on Reuteus, JPMorgan Chase & Co posted far weaker-than-expected quarterly profit. The bank was consistently profitable during the financial crisis, but is struggling to figure out how to navigate the current environment.

Earlier this week, JPMorgan report possible weaker earnings due to litigation expenses. However, Friday's results showed how the bank's troubles appear to be more than just legal settlements and meeting new rules, and into areas more fundamental to the business, such as loan demand and trading volume. “Most of the bank's big businesses, including commercial lending and credit cards, delivered lower profits. JPMorgan's bond trading revenue plunged 21 percent, and mortgage lending revenue fell 84 percent from the same quarter last year.”

JPMorgan’s CEO remains optimistic, however, “the business will grow over the next decade or two.”

Mortgage banking net income and production revenue drop significantly compared to a year earlier. U.S. mortgage lending has cooled after rising rates in the second half of last year have given fewer homeowners reason to refinance their loans. Wells Fargo & Co, the biggest U.S. home lender, also reported results Friday and said its income from mortgage banking fell 46 percent from a year earlier.

This weak earning from JPMorgan shows the financial sector may expect a difficult time ahead because when investors and consumers are still uncertain about the state of the economy. Lower mortgage is also a big concern for the economy, because the housing sector is usually the one that helps the economy recover. However, not all banks are suffering weak earning. In contrast, first-quarter earnings at Wells Fargo, less dependent on such Wall Street profit generators, rose 14 percent, fueled in part by gains on one-time items such as auto lending and loans to corporations.

http://www.reuters.com/article/2014/04/11/us-jpmorgan-results-idUSBREA3A0RB20140411