Third-quarter results included legal expense in Corporate of $9.2 billion ($7.2 billion after-tax), and a benefit from reserve releases of $1.6 billion ($992 million after-tax). Excluding these items, third-quarter net income would have been $5.8 billion, or $1.42 per share1.
Jamie Dimon, Chairman and Chief Executive Officer, commented on the Company’s results: “While we had strong underlying performance across the businesses, unfortunately, the quarter was marred by large legal expense. We continuously evaluate our legal reserves, but in this highly charged and unpredictable environment, with escalating demands and penalties from multiple government agencies, we thought it was prudent to significantly strengthen them. While we expect our litigation costs should abate and normalize over time, they may continue to be volatile over the next several quarters.”
Dimon continued: “The Board continues to seek a fair and reasonable settlement with the government on mortgage-related issues – and one that recognizes the extraordinary circumstances of the Bear Stearns and Washington Mutual transactions, which were undertaken at the request or encouragement of the U.S. Government.”
Commenting on the business performance, Dimon continued: “We maintained our #1 ranking in Global Investment Banking fees and our unparalleled capital raising and advisory capabilities led to ground-breaking transactions and market share gains. Equity Markets revenue was up 20%, driven by broad-based strength across products. In Consumer Banking and Credit Card, our customer satisfaction scores continue to rise and our customer attrition remains low. For the second consecutive year, we led the nation in deposit growth – up 10% from the prior year – more than twice the industry average. Credit card sales volume was a record $107.0 billion, up 11%, and general purpose credit card sales volume growth has outperformed the industry for 22 consecutive quarters. Asset Management continued to have strong performance, with $19 billion of net long-term client flows, the 18th consecutive quarter of positive net long-term client flows. We are seeing continued positive trends in consumer and stability in wholesale – loss rates in mortgage are improving steadily as delinquencies continue to decline, and credit card delinquencies are at 20-year lows across the industry.”
Dimon concluded: “We continue our intense focus on our legal, control, and regulatory agenda – we are simplifying our business and making unprecedented investments in controls, which will make our company better and stronger for the long-run. We are extremely gratified that, in light of the issues the Company is facing, our people continue to do an unwavering and excellent job in serving their clients and communities, which you see in the underlying performance of our businesses.”