JPMorgan reported nearly $18 billion in profit for 2013, down from $21 billion in 2012. Financial results were affected by roughly $22 billion in legal fines and settlements, many tied to events more than five years earlier, with some amounts accrued rather than paid during the year. One-time expenses and accounting moves complicate efforts to determine underlying earnings and can mask trading losses. Opaque financial disclosures hinder assessment of bank health and the ability to foresee crises. Adjusted analysis indicates core profitability was solid, though not substantially improved compared with 2012.
Nice year, but down from the $21 billion it made the year before. Still, 2013's financials include all the money that JPMorgan had to spend to settle its legal battles, much of which are related to events that took place more than five years ago. The implication is that if you exclude that, the bank's bottom line is actually much, much better.
The problem is legal fees are not the only one-time expense or benefit in JPMorgan's financial statements. MORE: By one key measure, JPMorgan is lending a lot less than it used to So what did JPMorgan really make in 2013? Attempting to find that answer shows just how convoluted and opaque bank financial statements can be. That's something all of us should be worried about.
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