JPMorgan Chase & Co., the biggest U.S. bank, said first-quarter profit fell 19% on lower revenue from fixed-income trading and mortgages, themes that may be repeated across Wall Street next week. The shares declined 2.9%.
Net income dropped to $5.27 billion, or $1.28 a share, from $6.53 billion, or $1.59, a year earlier, according to a statement today from New York-based JPMorgan. Ten analysts surveyed by Bloomberg estimated $1.46 a share on average.
JPMorgan, the first of the top U.S. banks to post results for the period, said profit fell in every major division, amid a 42% drop in mortgage revenue and a 21% slide in fixed-income trading. Chief Executive Officer Jamie Dimon warned investors in February that trading had fallen 15% for the first two months of 2014, a decline analysts including David Konrad of Macquarie Group Ltd. blamed on a reduction in the Federal Reserve's bond purchases.
"It's been a tough quarter for the industry," said Pri de Silva, senior banking analyst at CreditSights Inc. in New York. "I'm not overly worried about JPMorgan unless I see something else going on apart from what we already know is lower fixed- income trading and mortgage results."
JPMorgan fell to $55.75 in New York trading at 7:41 a.m. from $57.40 yesterday.
Konrad said in an April 4 research note that banks will have a "challenging quarter" as higher interest rates reduce loan refinancings.
Total revenue dropped 7.7% to $23.9 billion, as noninterest expenses declined 5.1% to $14.6 billion.
JPMorgan's investment-banking head, Daniel Pinto, said this week he was overhauling the division's reporting lines after his former co-head, Mike Cavanagh, left to join Carlyle Group LP. Pinto named Carlos Hernandez co-head of global banking with Jeff Urwin, John Horner head of investor services and Joyce Chang global head of research.
Earnings at Pinto's corporate and investment bank dropped 24% to $1.98 billion, as revenue declined 15% from a year earlier to $8.61 billion. Fixed-income trading revenue fell to $3.8 billion on "weaker performance across most products and lower levels of client activity," the bank said.
The 21% drop in fixed-income trading revenue surpassed estimates of a 15% decline from Moshe Orenbuch, an analyst at Credit Suisse Group AG, and 17 percent from Wells Fargo & Co.'s Matt Burnell.
Net income from consumer and community banking, run by Gordon Smith, fell 25% to $1.94 billion as provisions for credit losses surged 49% to $816 million. Revenue was $10.5 billion, down 10% from a year earlier.
Mortgage revenue dropped to $1.57 billion in the quarter, from $2.72 billion a year earlier. Home-loan originations were $17 billion, down 68% from the prior year as higher interest rates curtailed refinancings.
JPMorgan said profit in asset management, run by Mary Erdoes, declined 9% to $441 million, as costs rose 11% to $2.1 billion on "headcount-related expenses." Assets under management climbed 11% to $1.6 trillion amid greater inflows and rising equity markets. Commercial banking, a division run by Doug Petno, posted a 3% profit decline to $578 million.