March 22, 2023

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JPMorgan (JPM) earnings for the second quarter of 2022

JPMorgan (JPM) earnings for the second quarter of 2022

c. B. Morgan Chase He said Thursday that second-quarter earnings slumped as the bank built $428 million in bad loan reserves and suspended share buybacks.

Here are the numbers:

  • Earnings: $2.76 per share versus $2.88 per share estimated by analysts surveyed by Refinitiv.
  • Revenue: $31.63 billion, versus $31.95 billion estimated

New York-based JPMorgan said earnings fell 28% from a year earlier to $8.65 billion, or $2.76 per share, driven largely by reserve building. statement. A year ago, the bank benefited from freeing up a $3 billion reserve. Revenue rose 1% to $31.63 billion, helped by the tailwind of higher interest rates, but it still fell short of analyst expectations.

“We are dealing with two opposing factors, operating on different schedules,” CEO Jamie Dimon said in the statement. “The US economy continues to grow, and both the labor market and consumer spending and their ability to spend remain healthy. But geopolitical tensions, high inflation, waning consumer confidence, and uncertainty about how interest rates will rise are things that have never been seen before. It is very likely that quantitative tightening and its impact on global liquidity, along with the war in Ukraine and its detrimental effect on global energy and food prices, will have negative consequences for the global economy sometime down the road.”

Dimon said the bank chose to “temporarily” hold its stake buybacks on hold to help it reach regulatory capital requirements, a prospect analysts feared earlier this year. Last month, the bank Forced to keep its profits unchanged While competitors boosted their payouts.

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The bank’s shares were down 2.5% in pre-market trading.

JPMorgan, the largest US bank by assets, is being closely watched for clues about how the banking industry has performed during a quarter marked by conflicting trends. On the one hand, unemployment levels remained a littleThis means that consumers and businesses should not have much difficulty repaying loans. Higher interest rates and loan growth mean that the core lending activity of banks has become more profitable. The volatility in the financial markets has been a boon for fixed income traders.

But the analysts slash Sector earnings estimates On concern about a looming recession, most major bank stocks have fallen to 52-week lows in recent weeks. Revenue from capital market activities and mortgages fell sharply, companies can disclose new write off the value Amid a massive decline in financial assets.

More importantly, the major tailwinds that the industry enjoyed a year ago – reserve issuances where loans performed better than expected – are beginning to reverse as banks are forced to set aside money for potential defaults as recession risks rise.

Back in April, JPMorgan was the first among the banks to begin setting aside funds for loan losses, booking a $902 million charge To build credit reserves in the quarter. This is in line with the CEO’s more cautious view Jimmy Damonwho warned investors last month that the economictornado“He was on his way.

Alongside the second-quarter results, analysts will be keen to receive any updates Dimon has on his economic outlook. Inflation has proven more stubborn than expected, with the US Consumer Price Index 9.1% rise In June alone.

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Thanks in part to higher US interest rates, JPMorgan said on the company’s investor day in May that it could achieve a key goal of returns 17% This year, earlier than expected. In fact, the bank reached that level this quarter.

Finally, bank analysts may ask whether management Expenses can be set lower as a response to the business environment.

JPMorgan shares are down 29% this year through Wednesday, worse than the KBW Bank’s 19% decline.

Morgan Stanley He is due to report on the results later on Thursday, followed by Wells Fargo And the City Group Friday and American bank and Goldman on Monday.

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