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For the first time in over two years, and only the fifth time in a decade, JPMorgan Chase & Co. (NYSE: JPM) missed earnings forecasts when it posted first-quarter 2014 results Friday.
Investors were prepared for a slip in earnings compared with Q1 of 2013. In February, JPM cautioned trading revenue was weak. The warning was especially troubling because the first quarter is traditionally a strong one.
But Q1 of 2014 wasn't just weak – it was JPM's worst quarter since 2008, during the depths of financial crisis.
Chief Executive Officer Jamie Dimon acknowledged "industry headwinds" in the largest U.S. bank's markets and mortgages. Yet he remains confident about the economy.
"We have growing confidence in the economy – consumers, corporations and middle market companies are in increasingly good financial shape and housing has turned the corner in most markets – and we are doing our part to support the recovery. JP Morgan Chase provided credit and raised capital of over $450 billion for our clients during the first quarter of 2014, which included $5 billion for U.S. small businesses," Dimon said in the earnings release.
Following are highlights from the bank's first quarter.
10 Key Takeaways from JPM's Q1 Earnings
- JPM earned $1.28 per share, 12 cents shy of the $1.40 analysts were expecting, and down from $1.59 per share in the same quarter a year ago.
- Net income fell 19% to $5.27 billion, down from $6.53 billion year over year.
- Revenue dropped 8% to $22.99 billion, down from $25.12 billion a year earlier. That missed projections of $24.43 billion.
- Revenue from trading fixed income, currencies, and commodities fell 21% to $3.8 billion compared with the same period in 2013. That was steeper than the 15% decline JPM projected in February. Waning performance in fixed-income trading – once a catalyst of earnings growth among investment banks – highlights how new regulations and changes in investor sentiment is affecting the segment.
- Mortgage originations plummeted 68% over the year to $17 billion, down from $52.7 billion a year ago, amid a slowdown in mortgage refinancing.
- Mortgage banking net income fell to $114 million in the quarter, a drop of $559 million from the year-earlier period.