“JPMorgan’s mounting legal bills have contributed to the first fall in US banks’ net income for more than four years, according to a report released by the Federal Deposit Insurance Corporation on Tuesday.
“FDIC-insured banks reported total net income of $36bn in the third quarter – $1.5bn less than a year ago, and the first year-on-year decline since the second quarter of 2009.
“Half of the 6,891 institutions insured by the FDIC reported growth in earnings during the past year. But the FDIC said JPMorgan’s litigation expenses were the big reason for the 4 per cent overall drop and, without these costs, the upward trend in bank earnings would have continued.
“Legal costs are expected to have less impact on future net income, as JPMorgan and other US banks settle various cases. In October, JPMorgan reported its first loss since 2004 following a $7.2bn litigation hit from investigations into mis-selling mortgage-backed securities, and other regulatory deals. This month the bank agreed to pay $13bn in a mortgage securities settlement with the US Department of Justice.”
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