JPMorgan’s Profit Jumps, but Interest Rates Remain a Threat

JPMorgan Chase & Co., the largest US lender, reported on Friday that it posted a profit of $14.5 billion in the last quarter, up significantly from the same period last year. The bank was supported by near-universal growth, including growth in lending and credit card transactions, and relative stability in its investment banking business. JPMorgan stock rose 3% in premarket trading.

It was also a strong quarterly result and a reminder that the banking industry tends to make the rich get richer.

Given its size, JP Morgan represents the entire banking industry. The bank’s chief executive, Jamie Dimon, has deep political ties, and his economic predictions are as scrutinized in some circles as the speculations of central bankers.

In a statement on Friday, Dimon said the U.S. economy was “resilient,” echoing a phrase he’s used repeatedly this year, noting that consumers were running out of money and inflation remained high. He cited a number of risks, including the fact that

And there were two interesting digressions in the bank’s latest earnings. Total deposits fell slightly, suggesting consumers are moving their cash elsewhere at a time when rising interest rates have made it easier to find higher-yielding investments than checking accounts. . . Separately and related to interest rates, JP Morgan lost $900 million last quarter on investments in US Treasuries and mortgage-backed securities. Its value fell as interest rates rose, but that had little impact on its performance.

JPMorgan and Dimon made headlines this year thanks to their prominent stabilizing roles during the spring banking crisis that brought down three smaller financial institutions. JP Morgan bought First Republic, one of the failed banks. JP Morgan said Friday it would set aside $1.2 billion to cover losses in First Republic’s loan portfolio.

Analysts still expect the acquisition to ultimately prove worthwhile thanks to First Republic’s high net worth client base and coastal branches, and Friday’s results already show JPMorgan’s assets, This indicates that the company is strengthening its asset management division.

Many other banks are due to release quarterly results in the next week or so. Most notable will be Wednesday’s results for Goldman Sachs, which publicly hinted at disappointing developments, and for regional banks such as Western Alliance and Comerica, which want to prove they’ve bounced back from their recent woes.

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