[ad_1]
JPMorgan Chase & Co.’s first-quarter profit dropped 42%, weighed down by lower Wall Street fees and higher expenses.
The nation’s biggest bank earned $8.28 billion, or $2.63 per share, compared with $14.3 billion, or $4.50 per share, a year ago. Analysts had expected $2.72 per share, according to FactSet.
Revenue fell 5% to $30.72 billion, ahead of analyst expectations for $30.59 billion.
Total expenses, which investors were watching closely, rose 2% to $19.19 billion in the quarter, roughly in line with expectations. Chief Executive Jamie Dimon has stressed the bank needs to invest in its future and that the postpandemic era is the right time to do it.
JPMorgan took $1.5 billion in total credit charges for the quarter; a year ago, the bank got a $4.2 billion boost from freeing up money it had earlier set aside for potential defaults. The bank said it budgeted $900 million for higher credit losses this quarter because of economic challenges such as inflation and the war in Ukraine, and to account for its exposures in Russia.
“We remain optimistic on the economy, at least for the short term,” Mr. Dimon said in a release, citing the financial health of consumers and businesses.
But Mr. Dimon said he also sees “significant geopolitical and economic challenges ahead.”
About one-third of the funds set aside for potential credit losses are tied to Russia, Chief Financial Officer Jeremy Barnum said, and the rest is to account for the risk that Federal Reserve rate increases tip the economy into recession.
In consumer banking, revenue fell 2% while profit dropped 57%, hurt particularly by the credit comparison to a year ago.
Consumer spending on credit cards rose 29% and credit-card loans increased 15%. Though card loans remain below prepandemic levels, the increase is a sign that customers have started to burn through stimulus funds that buffered them throughout the pandemic.
Mortgage originations dropped 37% from a year ago, largely due to rising interest rates.
In the corporate and investment bank, revenue dropped 7% and profit fell 26%.
The unit took $524 million in losses related to the bank’s commodities and Russia exposure, including $120 million in trading losses tied to nickel. JPMorgan is a top margin lender to Chinese metals company Tsingshan Holding Group, whose giant short position on nickel plunged when the price of the metal surged after Russia invaded Ukraine.
Trading revenue fell 3% from the year earlier, when corporate debt sales, initial public offerings and an army of individual investors powered a stock-market boom. Fixed-income trading was down 1% and equities trading was down 7%. Total investment banking fees fell 31%, with declines in debt and stock underwriting.
Profit in the commercial bank fell 28% to $850 million. In asset and wealth management, profit dropped 20% to $1 billion.
Total loans increased 6%, a welcome sign after two years of sluggish loan growth. Those loans were also more profitable. The Federal Reserve raised interest rates last month and is expected to continue increasing them throughout the year, and higher rates allow banks to charge more on loans.
The bank’s net interest margin, a measure of what it collects on loans minus what it pays for deposits, rose to 1.67% from 1.63% at the end of December.
JPMorgan shares were down 17% this year through Tuesday, underperforming the broader market. They slid 1% to $130.20 in premarket trading Wednesday.
[ad_2]
Source link