- JPMorgan reported results below expectations.
- The decline is 28% in its quarterly earnings.
- The bank increased the provision for credit losses.
JPMorgan Chase & Co CEO Jamie Dimon reported a 28% lower-than-expected decline in quarterly earnings. The company suspended share buybacks due to risk of an impending recession.
Dimon advocated the need to build more capital reserves and expressed concern about the future of the war in Ukraine, global inflation and threats to world economic growth. He also highlighted the strength of the U.S. labor market as well as consumer spending among the population.
The director told reporters “We are facing a storm with an uncertain outcome for the future of the economy. The risks are closer than ever. The outcomes range from a soft landing to an extremely hard landing.”
The rate hike policy benefits large lenders since their profit increases, but these rapid increases lead to a slowdown in the economy. Consumers have a higher cost of borrowing and this slows the growth of bank lending.
JPMorgan’s results have been dark this quarter since the Fed began raising interest rates to counter inflation, which led to a drop in the markets on concerns of a slowdown in growth.
JPMorgan shares are down more than 3% in mid-market trading. The bank reported $1.1 billion in provisions for credit losses, which included a $426 million increase in provisions for credit losses.
It also posted a profit of $8.6 billion, which represents $2.76 per share, a number below analysts’ expectations of $2.88 per share.
Citigroup and Wells Fargo are the other banks that will release results this week. Bank of America and Goldman Sachs will do so next week.