JP Morgan's Legal Costs Tumbling Profit MarginThe Paralegal Resource
January 15, 2014 — 924 views
The fourth quarter showed poor results for the banking giant JP Morgan Chase with a seven percent decrease in their overall profit. The dip in their charts is a direct result of the legal fees that the company had to deal with during this time. The bank had earlier announced a net inflow of money of about $5.3 billion, down from $5.7 billion during the same quarter last year. If the calculations are to be made on a per-share basis, then the share value was nine cents more costly the previous year for every share of the company.
The drop shows a decrease in revenue by about a one percent drop in revenue. Now the revenue figure stands at $24.1 billion. The bank continues to face legal issues, and must deal with them while surviving in the highly competitive market. In the recent past, major banks have been making aggressive positioning, reshuffling and growth moves to secure better positions than their opposition.
Banks Movement in the Past Year
The number of trade-offs mergers, acquisitions and employee changes have been substantial, and are indicative of a very bold and aggressive growth strategy by all banks, including JP Morgan. However, if the legal woes continue for the bank, they may be shorthanded in the growth model that is become popular, and the tables may be turned on it. The criminal charges that the bank faces comes from the failure the bank showed in reporting the various issues regarding Bernard Madoff’s service for private investment.
JP Morgan Settles for $1.7 Billion
On January 8, 2014, the bank agreed to shell out a sum of $1.7 billion to the plaintiff to settle the criminal charges made against the bank. Once the bank settles this case, it will find itself in a situation where it is underhanded. Also, the issue is that when such large corporations come in the news for events that have the possibility of tarnishing their images, it becomes difficult to face the rivals in the business because clients prefer to move to banks that have no such history.
Such a case simply puts them at a disadvantage. However, CEO of JP Morgan Chase mentioned in a public announcement that it was in the interest of the bank to settle, and continue in their work. Now the bank has to recover the massive drop seen in their profits.