Photo: Lisa Du, Business Insider
In addition to commenting on JP Morgan’s fourth quarter performance this morning, CEO Jamie Dimon also expanded on recent statements he made about the U.S. housing market hitting a bottom and criticised the role of financial regulators. “Half the market in America is cheaper to buy than to rent. Housing is all about affordability and my opinion is mortgage underwriting will loosen, not tighten,” Dimon said during the call.
He added that as employment gets back on track and household formation picks up again, the housing market could make a formidable comeback. Dimon did not specify any date for for the bottom, simply saying it is “getting closer” and could be anywhere from three to nine months.
JP Morgan released less-than-stellar fourth quarter earnings this morning, the figures dragged down by big losses in the investment banking business, which were affected by uncertainty in the volatile global economy. Dimon had said before the earnings that he expected investment banking revenue to be flat, but that was obviously not the case.
Net income for the investment bank sector of the company fell 52% year-over-year on a $732 million profit. But profits for the retail financial services and commercial banking areas of JP Morgan grew, increasing 16% and 21% year-over year respectively. The bank reported earnings of $0.90 per share for a profit of $3.7 billion, down 23% from the year before. Total revenue also landed at $22.2 billion, below the expected $23 billion. JPM stock, along with other financials, is getting battered today—trading down nearly 4% right now.
Inconsistent policy goals among regulators, the government and central banks could hinder an economic recovery in the US and Europe, Dimon said as he was repeatedly questioned about his opinion on the stability of the Eurozone—he had just returned from a trip to Berlin.
“There’s no one in charge of the global financial system… it’s crazy. Not the way to get a recovery going,” he said.
Last quarter, Dimon had some specific criticisms for the impending Volcker Rule during JPM’s conference call, but he did not add any new substantial opinions on the rule today.
Amusingly enough—Dimon noted that some traders and bankers have asked for better payouts due to recent media reports about the compensation-to-revenue ratio (Andrew Ross Sorkin’s most recent DealBook column, anyone?). According to David Faber at CNBC, JPM’s compensation ratio for 2011 was about 34%, that’s much lower than the 44% expected at Goldman Sachs for 2011.
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