JPMorgan misses Street, 4Q profit down 23%

JPMorgan Chase's income fell 23 percent in the fourth quarter of 2011 after the bank set aside a large sum for litigation reserves and its investment banking income declined.

The largest bank in the nation said Friday it earned $3.7 billion, or 90 cents per share. The results fell short of the 93 cents per share estimated by analysts surveyed by FactSet. Revenue fell 17 percent to $22.2 billion.

For the full year, JPMorgan Chase & Co. posted record net income of $19 billion, compared with $17.4 billion in the prior year.

The New York bank set aside $528 million for additional litigation charges in the quarter, the latest sign that the banking industry is still dealing with the fallout from poorly-written mortgages from years past.

Volatility in stock and bond markets caused by Europe's debt crisis also hurt JPMorgan's investment banking business. Fees declined 39 percent to $1.1 billion. Debt underwriting fell 40 percent, and stock underwriting fell 65 percent.

JPMorgan also had to book a loss of $567 million loss from an accounting rule that applies to the value of its own corporate debt. Because the value of its debt rose in the fourth quarter, the bank would theoretically have to pay more to buy it back in the open market. When that happens, accounting rules require that the bank record a charge against earnings. Corporate bond prices recovered in the fourth quarter after declining sharply in the third quarter.

In another sign that American households are becoming more stable financially, JPMorgan said more credit card customers have been paying their bills on time, leading to lower losses for the bank. JPMorgan was able to take a profit of $730 million by reducing its loan reserves set aside for credit card defaults.

That was good news. As the largest bank in the country serving 50 million customers, JPMorgan's results provide a pulse for how well the U.S. economy is performing.

JPMorgan's stock fell 2.3 percent to $36.01 in pre-market trading.