JPMorgan Chase reported Thursday that second-quarter profits were lower than in the same period last year, securing more money to cover potential bad debt losses and suspending share buybacks. He said he was. While these actions may be seen as preparations for a recession, executives at the largest US bank said there were few signs that the US economy was in recession.
Retail banking customers are still spending money on things they need but don’t need, such as travel and restaurants. The business lent by JP Morgan makes better use of several credit lines.
“We looked at the actual data very carefully,” Jeremy Burnham, the bank’s chief financial officer, said in a phone call with reporters. “In essence, there is no evidence of actual weakness.”
JP Morgan’s earnings were squeezed by falling stock prices, slowing investment banking and softening the mortgage market. I feel the impact of rising interest rates on the Federal Reserve to combat the sharp inflation that has disrupted financial markets. Jamie Dimon, CEO of JP Morgan, said bankers are preparing for a potentially volatile year.
“We are addressing two conflicting factors and operating on different timetables,” Dimon said in a news release. “The unprecedented quantitative tightening and its impact on global liquidity, how high interest rates must go, coupled with the war in Ukraine and the negative impact on global energy and food prices, is uncertain. Certainty is that the world economy is someday ahead. “
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JP Morgan’s revenue was $ 8.6 billion between April and June, 28% lower than the same period last year, but slightly higher than its first quarter profit of $ 8.3 billion. Most have secured new reserves for potential losses on loans in the consumer business and reported provisions for a total loss of $ 1.1 billion. Banks’ latest earnings fell short of analysts’ expectations, hitting stocks that fell about 5% at the start of the deal.
However, banks are still issuing new credit cards, and card usage has increased by 15% over last year. Spending on travel and food was 34 percent higher.
On Wall Street, the fees earned by banks to provide investment banking services, such as advising companies on mergers and underwriting initial public offerings, have dropped significantly. Overall profits for the Wall Street business were down 26%, down 54% from the same period last year. However, as prices of equities, bonds and other financial products fluctuated rapidly and dramatically, bank profits increased 15% from last year in the thriving trading company business in the era of volatility.
During the pandemic, the Federal Reserve raised interest rates to stabilize the market, stopped programs to buy bonds, and caused major changes in the market. Other banks are also feeling this effect.
Morgan Stanley’s profits, which reported earnings on Thursday, also missed analysts’ expectations. Second-quarter earnings of investment banks and investment companies were $ 2.4 billion, down nearly 30% from the year-ago quarter. Trading has ceased due to the recent market turmoil, and commissions for selling stocks and bonds have plummeted.
JP Morgan also temporarily repurchased its shares, a way to distribute additional cash to shareholders in order to more quickly build capital reserves to meet the restructured requirements set by regulators. Announced that it will stop. Dimon told reporters that banks would “probably” still buy back shares without new regulatory requirements.
