Business

JPMorgan reports 12% rise in first quarter profits

A sign outside the headquarters of JP Morgan Chase and Co in New York, Image copyright Reuters

JPMorgan Chase has reported a 12% rise in profit to $5.91bn (£4bn) for the three months to the end of March, as revenue from bond trading improved.

The US banking giant said net income in its corporate and investment banking division was $2.5bn, up $412m compared with the same period a year earlier.

But it also reported an after-tax charge of $487m for legal expenses.

And it set aside a total of $959m to cover bad loans, $109m higher than a year earlier.

JPMorgan's legal expenses stem in part from the fact that it still faces an investigation by the US Justice Department into its involvement in the manipulation of foreign exchange markets.

It also faces a probe into its hiring policy in Asia.

Meanwhile, Wells Fargo, the largest mortgage lender in the US, reported a 2.6% fall in profits in the first three months of the year and set aside more money to cover bad loans.

Net income was $5.46bn in the three months to the end of March ,compared with $5.61bn a year earlier.

The bank said it was setting aside $617m for credit losses an increase of $198m on the same three months a year earlier.

Dividend rise

JPMorgan said revenue from fixed-income bond trading rose 5% to $4.07bn, adjusted for the sale of businesses last year, including a commodities operation.

"We have an outstanding franchise which is getting safer and stronger, and is gaining market share over time," said chief executive Jamie Dimon.

"We continue to build the company for the long-term, we are investing in controls, infrastructure, systems, technology, new products and bankers."

The bank said it was increasing its second quarter dividend from $0.40 to $0.44.

JPMorgan's investment bank, along with its rivals, is under pressure to cut costs as customers have reduced their trading activity following the financial crisis.

Regulators have also demanded that big banks take fewer risks, hold more capital and improve controls.

The bank has said it wants to cut expenses by $2.8bn by 2017, excluding legal costs, though some of the savings are expected to be offset by more spending to improve risk controls.

JPMorgan and Wells Fargo are the first of the large US banks to report quarterly results.

Overall, results are expected to show that low interest rates have continued to hold down profits as consumers and businesses refinance loans at lower rates.

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