JP Morgan braces for losses from “pretty severe” recession
JPMorgan Chase profits fell 69% in the first quarter as the largest US bank braced for a “pretty severe recession” by dramatically increasing loan loss provisions.
The bank reported net profit of $ 2.9 billion (€ 2.65 billion) for the three months ended March, up from about $ 9.2 billion a year earlier.
Earnings per share of 78 cents US was much worse than the $ 1.76 predicted by analysts contributing to a Bloomberg poll.
The results were mainly due to a nearly $ 6.8 billion increase in loan loss provisions, which chief executive Jamie Dimon attributed to “the likelihood of a fairly severe recession.”
Total loan provisions stood at $ 8.3 billion for the first quarter of 2020, the highest since 2009 during the global financial crisis.
JPMorgan is known as one of the most conservative banks on Wall Street, but the breadth of the provisions sets a somber tone for other major U.S. banks that are releasing this week.
Still, Mr Dimon said his bank “performed well in a very challenging and unique operating environment – increasing deposits across all lines of business and providing loans as we extend credit and serve as port in the storm for our customers and clients ”.
The bank was inundated with $ 270 billion in additional deposits in the fourth quarter, bringing total deposits to $ 1.84 trillion.
The investment banking income fell 49% year-on-year to $ 886 million, mainly due to $ 820 million in write-downs on bridging loans.
Market revenues of $ 7.2 billion increased by 32%, much more than the increase in “teenagers”, the boss of the investment bank, Daniel Pinto, underlined at the end of February, because “a strong client activity Led to a 34% increase in fixed income transactions while a derivatives boom helped stock income rise 28 percent.
JPMorgan’s net interest income remained stable for the year despite falling interest rates. – Copyright The Financial Times Limited 2020