JPMorgan releases Q4 earnings
There was lots of interesting news on JPMorgan Chase earnings day.
The bank was reported yet another upside surprise for the fourth quarter. Revenues soared 10 percent to $23.7 billion year over year, while earnings climbed 53 percent, trouncing expectations. The bank was solid in all key business segments, institutional and consumer; significantly, it got a nice boost from mortgage refinancing activity.
Net interest margins continue to decline, however, as deposits continue to grow at a strong clip. The bigger news might have been the announcement that the bank docked the pay of CEO Jamie Dimon, something I had suggested some time ago.
In response to the London Whale "hedging" fiasco, the board cut Dimon's total pay for 2012 to $11.5 million from $23 million in 2011. His salary did not change at $1.5 million, but his bonus was slashed to $10 million in restricted stock grants.
The idea here is to let the world now that accountability goes all the way to the top of the firm. The buck stops with Dimon; he would not have it any other way. The bank also released two reports on the incident, hoping to put it bed for good. While Dimon himself was not criticized severely, the reports were tough on Ina Drew, then head of the CIO unit, Douglas Braunstein, then CFO, and Barry Zubrow, then chief risk officer.
All in all, the entire London Whale episode was marked by a lack of oversight and risk management consistency. Traders within the CIO unit seemed to run roughshod over anyone who questioned whether their positions were sound and appropriately hedged, to the extent that faulty information was passed up to the risk policy committee. I only hope that the incident is now over.
- here's the article from the FT