JPMorgan Beats on Earnings; Dimon Suffers 'Whale' Fallout

JPMorgan Chase headquarters, NY
Scott Eells | Bloomberg | Getty Images
JPMorgan Chase headquarters, NY

Strong growth across its banking and asset management segments drove JPMorgan Chase's fourth quarter earnings higher, the bank reported on Wednesday, defying concerns about the global economy and beating Wall Street's expectations.

Despite the constructive earnings results, JPMorgan Chairman and CEO Jamie Dimon paid a hefty price for a trading scandal in the U.K. that cost the bank more than $6 billion. After a report faulted the bank's risk controls, the board stripped Dimon's of more than half of his 2011 total pay, approving compensation of only $11.5 million versus $23 million in the previous year.

The so-called "London Whale" imbroglio became a major source of embarrassment for Dimon, one of Wall Street's longest serving chief executives who has publicly complained about efforts to tighten banking regulation.

The Whale incident "scared" the bank, Dimon acknowledged on a conference call with investors and reporters on Wednesday. The bank's chief added that he respected the board's verdict on his pay.

He admitted there had been changes to JPMorgan's oversight as a result, helping the mega bank to get "stronger, better, smarter and tougher."

The banking giant posted fourth-quarter earnings excluding items of $1.39 per share, up from 90 cents a share in the comparable year-ago quarter and above Thomson Reuters' consensus estimates of $1.16. During the quarter, JPMorgan posted revenues of $24.4 billion, up from $22.2 billion a year ago and broadly in line with analysts' expectations.

Net income for the quarter was $5.7 billion, compared with $3.7 billion in the year-ago period.

JPMorgan reported record fees from debt underwriting and maintained its top ranking for global investment banking -- two cornerstones of the bank's business. The New York-based banking behemoth also said asset management and commercial banking revenues had hit a record.

In a nod to the gradual recovery of the U.S. housing market and the broader economy, JPMorgan cited improvement in its housing and credit card portfolio. On his conference call, Dimon said the housing sector appears to have turned decisively from the doldrums of the post financial crisis era.

"We continued to see favorable credit conditions across our wholesale loan portfolios and strong credit performance in our credit card portfolio, where charge-off rates remain at historic lows," Dimon said in a statement.

"The real estate portfolios, while at elevated levels of losses, continued to show improvement as the housing market and economy continued to recover," he added.

After falling by more than a percent in early market dealings, the company's shares rebounded to trade largely flat on the session. (Click here for the latest pre-market quote.)