Updated 8:04 a.m. EST
JPMorgan Chase & Co (JPM) – Get the report from JP Morgan Chase & Co. released weaker-than-expected second-quarter results on Thursday as loan growth slowed amid inflationary uncertainty in the world’s largest economy and the bank set aside more than $1 billion to cover the credit risk.
JPMorgan said earnings for the three months ending June were pegged at $8.6 billion, or $2.76 per share, down 27% from the same period last year and well in below Street’s consensus forecast of $2.90 a share. The bank also built up $1.1 billion in reserves to deal with bad debts and loan losses, linked in part to the “deteriorating” economic outlook, compared with a release of $3.3 billion in the second quarter. from last year.
Managed revenue, JPMorgan said, rose 0.6% from a year ago to $31.6 billion, again missing analyst estimates of a total of $31.96 billion, while spending was set at $18.1 billion.
Net interest income was $15.2 billion, up 19% from the same period last year, but that did not offset the 61% drop in revenue from investment bank, transaction fees drying up amid a pullback in SPAC and IPO listings.
“In our global economy, we are faced with two conflicting factors, operating on different timelines,” CEO Jamie Dimon said. “The U.S. economy continues to grow, and the labor market and consumer spending, as well as their ability to spend, remain healthy.”
“But geopolitical tensions, high inflation, declining consumer confidence, uncertainty about rising rates and unprecedented quantitative tightening and their effects on global liquidity, combined with the war in Ukraine and its effects adverse effects on global energy and food prices are very likely to negatively impact the global economy at some point,” he added. “We are prepared for whatever comes and will continue to serve our customers even in the most difficult times.”
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JPMorgan shares fell 3.27% in premarket trading immediately after the earnings release to point to an opening price of $108.25 apiece, a move that would extend the stock’s decline since the start of the month. the year at around 31.6%.
JPMorgan, one of the few major lenders to refuse to raise its dividend payout ratio after the successful conclusion of Federal Reserve stress tests last month, also said it was temporarily suspending share buybacks. in order to “allow us maximum flexibility to better serve our clients, customers and the community across a wide range of economic environments.
Dimon warned in April about the impact of the Russian-Ukrainian conflict on the bank’s profits, while warning that the Federal Reserve’s rate hikes “could be significantly higher than what the market expects” from here the end of the year.
Dimon’s rate forecast, along with his recent warning of an economic “hurricane,” could be part of his traditional outlook statement, released alongside JPMorgan earnings, which typically receive significant investor attention.
Morgan Stanley (MRS) – Get the Morgan Stanley report will follow JPMorgan with its June quarterly report later today, along with Wells Fargo (WFC) – Get the Wells Fargo & Company report and Citigroup (VS) – Get the report from Citigroup Inc. Friday and Goldman Sachs (GS) – Get the report from Goldman Sachs Group Inc. (The) On Monday
Profits in the financial sector are expected to fall 20.8% from a year ago to $66.4 billion equity-weighted, according to Refinitiv estimates.