U.S. stocks dropped in premarket trading after JPMorgan Chase & Co. reported a 6.6 percent drop in quarterly profit as legal costs exceeded $1 billion in the wake of government probes. Wells Fargo & Co. posted solid fourth-quarter results, in line with forecasts.
In premarket trading, the Dow Jones Industrial Average Futures, which measures the share prices of 30 large industrial companies, dropped 226 points, or 1.29 percent, at 17,309; the S&P 500 stock index futures fell 26.25 points, or 1.30 percent, at 1,988.50. The Nasdaq Composite futures lost 46.25 points, or 1.29 percent, at 4,104.74.
JPMorgan Chase’s Profit Drops 6.6% in Q4, Knocked Down By Legal Fines
JPMorgan shares dropped 2.50 percent Wednesday to $57.37 in premarket trading after the biggest U.S. bank by assets saw its quarterly profit drop more than 6.6 percent due to $1.1 billion in legal costs. The bank recorded nearly $847 million in legal expenses the prior year.
JPMorgan's fiscal fourth quarter net income fell to $4.93 billion, or $1.19 per share, on revenue of $23.6 billion, compared with a profit of $5.3 billion, or $1.30 per share, on revenue of $24.11 billion, a year ago. Analysts polled by Thomson Reuters had expected a per-share profit of $1.31 on revenue of $23.64 billion.
“The Corporate & Investment Bank saw strong performance in fees, maintaining its number one position in Global IB fees in 2014 with particular strength in Europe, although Markets remained somewhat challenged,” Jamie Dimon, JP Morgan's chairman and chief executive, said in a statement.
For its full fiscal year, JPMorgan recorded a net profit of $21.8 billion, or $5.29 per share, compared with a profit of $17.9 billion, or $4.35 per share, a year earlier. Revenue fell 2 percent to $97.9 billion.
JPMorgan agreed in November to pay $1 billion in penalties over its conduct in foreign exchange markets. Investigations into that and other areas of the bank's business, including alleged manipulation of Libor interest rates, are continuing, Reuters reported.
Wells Fargo Posts Q4 Earnings In Line With Wall Street Expectations
Wells Fargo, the fourth-largest U.S. bank, posted quarterly earnings Wednesday in line with Wall Street expectations as it saw stronger loan growth.
The San Francisco bank posted a profit of $5.71 billion, or $1.02 per share, on revenue of $21.44 billion, compared with a profit of $5.37 billion, or $1 per share, on revenue of $20.67 billion, a year earlier.
“Revenue increased as net interest income benefited from loan growth and the prudent deployment of our liquidity. Fee income remained strong and diversified. Credit quality continued to improve,” Chief Financial Officer John Shrewsberry, said in a statement.
For the full year, Wells Fargo recorded net income of $23.1 billion, or $4.10 per share, up 5 percent from a profit of $21.9 billion, or $3.89 per share, in 2013. Revenue in 2014 rose 1 percent to$84.3 billion. In premarket trading, Wells Fargo edged down less than 1 percent to $51.85.