JPMorgan Chase said profit fell 7.3 per cent in the fourth quarter after $2.6 billion in settlements linked to Bernard Madoff's Ponzi scheme ended a three-year streak of record annual earnings.

Fourth-quarter net income declined to $5.28 billion, or $1.30 a share, from $5.69 billion, or $1.39, a year earlier, according to a statement today from New York-based JPMorgan, the biggest US bank.

Results excluding the Madoff settlement and other one-time items were $1.40 a share.

Chief executive officer Jamie Dimon is whittling down the firm's list of legal woes that include allegations it misled buyers of mortgage bonds, rigged markets and turned a blind eye to suspicious activity by customers.

The Madoff agreement, which the bank said last week reduced fourth-quarter profit by about $850 million, capped a year in which JPMorgan spent more than $23 billion on legal settlements.

“All things considered, it wasn’t a bad quarter,” said Pri de Silva, senior banking analyst at CreditSights in New York.

“They had something close to a kitchen-sink quarter getting some legal issues done.”

Shares of the company rose to $57.80 at 7.22am in New York from $57.70 at the close yesterday.

Revenue dropped 1.1 per cent to $24.1 billion while expenses declined 3.1 per cent to $15.6 billion.

Full-year profit fell 16 per cent to $17.9 billion.

Earnings at the corporate and investment bank tumbled 57 per cent to $858 million, driven by a $1.5 billion charge from changing the valuation of some over-the-counter derivatives to incorporate funding costs.

Net income from consumer and community banking climbed 19 per cent to $2.37 billion as provisions for credit losses fell and expenses declined. Revenue was $11.3 billion, down 8 percent from a year earlier.

Mortgage fees and related income dropped 46 per cent to $1.09 billion in the quarter, from $2.04 billion a year earlier.

Bloomberg