The largest bank in the U.S. by assets, JPMorgan Chase announced late last week that its earnings for the first quarter of 2014 had fallen by 20%. A drop off in mortgage lending and investment banking drove the decline.
The bank reported that its net income had been $4.9 billion during the first three months of 2014, after taking out payments to the preferred stockholders. That income was done from last year’s during the same period of $6.1 billion.
Earnings per share were equal to $1.28, which did not meet analyst’s estimates that were expecting quarterly earnings of $1.39 per share.
Revenue for the bank after taking an accounting charge that was due to credit losses was over $23.81 billion, but down by over 8% from last year’s $25.8 billion during the same reporting period.
The fixed income trading part of the bank, which is a part of its unit of investment banking, dropped by 21% to just over $3.8 billion. JPMorgan’s Chief Executive and Chairman Jamie Dimon said the business performed well given the current environment in the market.
Dimon said the business was difficult to predict by that the bank was doing well. He said there was nothing wrong with the results, you just needed to deal with them over time.
The mortgage business at JPMorgan continued its slowdown. The increase in yields on bonds since the middle of last summer caused the rates on mortgages to rise, which then slowed down the amount of refinancing on current home loans.
The revenue in the mortgage unit of the bank was just under $1.6 billion, which was down by more than $1.1 billion from last year’s same reporting period. Mortgage originations, said the bank, plunged by 68% to just $6.7 billion, compared to the same reporting period in 2013.
The bank said it does not expect that trend to make a change in the short term, Marianne Lake the CFO told reporters during her conference call. She said the bank expects that particular trend to remain consistent.
JPMorgan said its cost were down 5% during the quarter to $14.6 billion. It plans to cut 8,000 jobs during 2014 as its business in mortgages shrinks.