J.P. Morgan Chase (Attractive*) reported a Q3 loss of $380m or 17 cents a share, after taking a $7.2bn charge for legal expenses. In the same period a year earlier, the New York-based bank had a profit of $5.71bn or $1.40. Adjusted earnings were $1.42 a share, topping the $1.29 median market estimate.
The bank is grappling with regulatory investigations as the bank works to tighten internal controls following its more than $6.2bn trading loss last year. JPM has been discussing a potential $11bn deal with state and federal authorities to settle that case as well as other related investigations. The bank further announced to cut the number of employees in its mortgage banking unit by 11,000 this year. In our view, taking a multi-billion dollars charge, J.P. Morgan should be able to settle the legal issues from the fallout of bad loans made before the housing crash and leave “the crisis after the crisis” behind. However, most of the largest U.S. banks are still struggling to show increased revenue amid narrowing lending margins, borrowers cutting debt levels and weak volumes in bond-trading.