The profit of JP Morgan, the largest U.S. bank in terms of assets, increased by 12% last year to $21.3 billion from $19 billion in 2011, despite the “whale” scandal at the London Stock Exchange, according to MarketWatch. In the fourth quarter, JP Morgan’s net profit rose by 53% to $5.7 billion from the same period of the previous year, due to record revenue and the surge in mortgage lending. The mortgage division posted a profit of $418 million for the fourth quarter of 2012, compared with a loss of $269 million for the same period of 2011. The annual revenue remained flat at $99.9 billion dollars, but in the last quarter rose by 10%, to $24.4 billion.
JP Morgan was in the spotlight in April, because of the “London whale” scandal from the London Stock Exchange on complex transactions with related CDS corporate bonds. Following these transactions, the bank recorded last year losses of over $6 billion. The scandal affected the reputation of James Dimon, the current chairman, president and chief executive officer of JPMorgan. He is considered one of the best risk managers in the banking industry.
JP Morgan published a report Wednesday that underlines the internal errors and management flaws of executives such as investment director Ina Drew, who left the bank, and CFO Douglas Braunstein, which has since become vice president.
Benefits of chief executive officer James Dimon for 2012 were reduced by 50.2%, to $11.5 million, from a year earlier, the report said.
JP Morgan is among the 10 banks the announced last week that will pay $8.5 billion to close an investigation by regulatory authorities related to foreclosure practices. Previously, JP Morgan announced that it put aside $700 million in the fourth quarter, costs related to the closure of the investigation of Comptroller of the Currency and the Federal Reserve.
There is another case that might be costly for JP Morgan: the attorney general of New York filed a lawsuit related to Bear Stearns, the investment bought in 2008 during the global financial crisis. According to the suit, JP Morgan defrauded investors that bought securities out of substandard mortgages.
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