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JP Morgan suffers after Madoff fines

Tuesday, January 14 12:55:02

JPMorgan reported a 7.3 percent drop in quarterly profit after the biggest U.S. bank by assets paid penalties to the government for not reporting suspicions of fraud by Ponzi-scheming client Bernie Madoff.

Net income fell to $5.28 billion, or $1.30 per share, in the fourth quarter from $5.69 billion, or $1.39 per share in the same quarter of 2012, the bank said today.

The latest results took into account gains from the sale of Visa Inc shares and One Chase Manhattan Plaza and legal expenses related to the Madoff settlements.

JPMorgan agreed last week to pay $2.6 billion to settle government and private claims over its handling of Madoff accounts. It estimated then that this would subtract $850 million from fourth-quarter earnings to cover expenses that it had not accounted for in reserves.

The company agreed to pay nearly $20 billion in 2013 to settle assorted legal claims.

"It was in the best interests of our company and shareholders for us to accept responsibility, resolve these issues and move forward," Chairman and Chief Executive Jamie Dimon said in a statement.

Analysts on average had expected earnings of $1.35 per share, according to Thomson Reuters I/B/E/S. It was not immediately clear if the announced figures were comparable.

JPMorgan shares were little changed before the opening bell on the New York stock Exchange.

The stock rose 33 percent in 2013, in line with the 35 percent rise in the KBW Bank index and slightly ahead of the 29 percent gain in Standard & Poor's 500 stock index.

The shares have been trading this month at their highest levels since 2000.

Special items highlighted by the bank subtracted 10 cents per share from fourth-quarter earnings, compared with a two-cent boost in the same quarter of 2012.

The special items included a benefit of 21 cents per share from the sale of Visa shares, 8 cents from the sale of One Chase Manhattan Plaza and an expense of 27 cents per share from legal bills, including the Madoff settlements.