Reuters and Bloomberg New York
JPMORGAN Chase’s rising legal and regulatory penalties did not mean the company’s bankers were “immoral”, chief executive Jamie Dimon said.
“We are a moral and ethical company,” Dimon said at the Institute of International Finance meeting in Washington on Saturday. “We had a series of problems. Some are self inflicted, which we’ve completely confessed to the whole world. Some are obviously industry-wide.
“And yes, we’ve had some mistakes. But honestly, you can never expect to have no mistakes. So, we’ve had more than our share,” he said.
Dimon presided over his first quarterly loss as JPMorgan’s chief executive after the bank said on Friday that it took a $7.2 billion (R71bn) charge to cover the costs of mounting litigation and government probes.
The loss is a blow to Dimon, who has long used the bank’s steady profit to ward off critics of its regulatory and legal issues. The bank for the first time said it had stockpiled reserves of $23bn for expected settlements and other legal expenses.
JPMorgan reported a loss of $380 million for the third quarter. A year earlier it posted a profit of $5.71bn.
Dimon had earned praise for avoiding most of the mortgage-related losses that hobbled rivals during the financial crisis. But he was less adept at anticipating legal expenses.
The third-quarter legal hit includes money set aside for future settlements. Dimon said these expenses were likely to be elevated for the next year or two.
“I wish we could reduce the uncertainty for investors, but we can’t,” he said, adding later that it was “very hard to fight with your regulators and the federal government”.
Putting litigation aside, revenue fell and other results were lukewarm. Weak fixed-income markets squeezed revenue at JPMorgan’s investment bank, off 2 percent from a year ago and down 17 percent from the second quarter, reflecting the tough climate for bond trading.
Equity markets revenue gained 20 percent.
JPMorgan executives have been quick to point out its profitability when investors bring up its troubles. The bank posted record profit last year, even as bad derivatives bets caused $6bn in losses.
But the third-quarter loss underscores how legal problems threaten profitability.
JPMorgan faces over a dozen probes globally.