US banking giants JPMorgan Chase and Wells Fargo kicked off earnings season Friday with mixed results that included hefty new legal costs at Wells following its fake accounts scandal.
Results from both banks were significantly affected by the just-enacted US tax overhaul, boosting Wells and hitting JPMorgan.
At Wells, net income came in at $6.2 billion, up 17 percent from the year-ago period and lifted by $3.4 billion in one-time items connected to the accounting of its future tax liability.
Revenues rose 2.2 percent to $22.1 billion.
But the results were marred by $3.3 billion in costs due to litigation and investigations, including the aftermath of a scandal in which Wells opened deposit and credit card accounts without customer approval.
The scandal has also dragged down Wells’ earnings in prior quarters due to increased spending on compliance initiatives. Executives say they are making progress in their efforts to win back consumer trust.
“While we faced challenges in 2017, we are a much better company today than we were a year ago, and I am confident that this year Wells Fargo will be even better,” said chief executive Tim Sloan.
At JPMorgan, net income for the quarter ending December 31 was $4.2 billion, down 37 percent from the year-ago period, due to $2.4 billion in costs connected to new tax law provisions on deferred taxes and repatriation of foreign earnings
Revenues rose three percent to $24.2 billion.
Bright spots included a jump in net interest income from higher interest rates charged to clients. JPMorgan also reported higher overall loans compared with the year-ago period.
On the downside, revenues in JPMorgan’s markets and investor services dived 22 percent, with fixed income revenues 34 percent lower amid little volatility. The bank also set aside greater funds in case of bad loans.
JPMorgan results were also hit by a $143 million loss for a loan to South African retail giant Steinhoff. Other large banks are also expected to report losses on Steinhoff, which is mired in an accounting scandal.
Despite the short-term hit to results from the tax bill, chief executive Jamie Dimon hailed the measure as a boon for the US economy.
“US companies will be more competitive globally, which will ultimately benefit all Americans,” Dimon said in a news release.
Shares of JPMorgan rose 1.1 percent to $112.07 percent to 110.70, while Wells Fargo dropped 0.5 percent to $62.71 in morning trading.