JPMorgan Chase posted a surprisingly steep profit drop and said it is halting share buybacks it sets aside $428 million for potential loan losses, signaling pessimism about the economy.
The nation’s largest bank said its earnings slumped 28%, falling to $8.65 billion or $2.76 per share Thursday — missing analyst expectations it would earn $2.88 per share, according to data from FactSet.
The financial behemoth helmed by Jamie Dimon also missed expectations for revenue — reporting $31.63 billion rather than the $31.95 billion FactSet analysts predicted.
In a statement, Dimon said the economy and job market remain healthy for now but predicted it likely won’t last for long.
“Geopolitical tension, high inflation, waning consumer confidence, the uncertainty about how high rates have to go and the never-before-seen quantitative tightening and their effects on global liquidity, combined with the war in Ukraine and its harmful effect on global energy and food prices are very likely to have negative consequences on the global economy sometime down the road,” Dimon warned in a statement.
The cautious tone was in line with comments Jamie Dimon made last month when he predicted an “economic hurricane” is coming.
Profits at the consumer bank fell 45% and profits at the investment bank fell 26%. The losses were partially offset by trading fees which jumped 15% in the second quarter.
The pessimistic forecast is a sharp turn of events from the last few years when banks raked in massive investment banking fees and market volatility pushed revenue higher.
JPMorgan reported a record year in 2021 — hauling in $48.3 billion in 2021. JPMorgan’s pre-pandemic record was $36.4 billion.
But the banks has faced headwinds in both the first and second quarter of 2022.
JPMorgan shares were trading around $112 per share in premarket trading Thursday — down nearly 3.5%. JPMorgan shares are down almost 30% this year.
It will be a busy week for Wall Street — top firms including Goldman Sachs and Morgan Stanley will also report earnings over the next week.
[Written in collaboration with other media outlets with information from the following sources]
