JPMorgan Earnings Crushed by Loan Losses and Interest Rates

JPMorgan Chase, America’s largest bank reported worse than expected Q1 earnings Tuesday before the open. JPM suffered massive loan loss provisions after the coronavirus pandemic locked down the U.S. economy. Wells Fargo also reported Tuesday.

JPMorgan Chase, America’s largest bank reported worse than expected Q1 earnings Tuesday before the open. JPM suffered massive loan loss provisions after the coronavirus pandemic locked down the U.S. economy. Wells Fargo also reported Tuesday

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 JPMorgan Chase & Co NYSE: JPM · Report Earnings Before Open Tuesday

$0.78 Missed $2.49 EPS Forecast AND $29.07Bil  Beat $28.97 Billion Forecast in Revenue

Earnings

JPMorgan Chase & Co (NYSE: JPM) reported first-quarter profits EPS of 78 cents on revenue of $29.07 billion. Wall Street expected JPMorgan earnings to fall 6% to $2.49 per share. Revenue was expected to slip 0.5% to $28.97 billion. Provisions for loan losses soared to $8.3 billion from $1.5 billion a year ago. Net interest income was flat at $14.5 billion. Results: EPS of 78 cents on revenue of $29.07 billion. Provisions for loan losses soared to $8.3 billion from $1.5 billion a year ago. Net interest income was flat at $14.5 billion.

JPM stock had outperformed other big banks over the past year.  In the JPMorgan conference call watch for macro expectations and risk given the recent weakness in many asset classes with a focus on costs from the COVID-19 lockdown. Lower interest rates hurt the results also.

JPMorgan Chase & Co NYSE: JPM

Market Reaction Mid Morning $94.00 −$4.24 (-4.32%)

JPM had been up to $102 before the market opened.

Highlights

In the first quarter, the underlying results of the company were extremely good, however given the likelihood of a fairly severe recession, it was necessary to build credit reserves of $6.8B, resulting in total credit costs of $8.3B for the quarter, CEO Jamie Dimon said.

  • Consumer banking revenue slipped 2% to $13.17 billion led by a decline in home lending.
  • Fixed-income trading revenue surged 34% to $5 billion, and equity trading jumped 28% to $2.2 billion.
  • Commercial banking revenue fell 10% to $2.18 billion,
  • Wealth management revenue rose 3% to $3.6 billion.
  • JPMorgan capital ratio of 11.5%
  • Total liquidity resources topping $1 trillion.

Credit-card payments processor Visa (V) late last month said that U.S. payment volumes fell 4% from March 1 to March 28. JPMorgan is one of Visa’s main card issuers.

JPMorgan Chase Q1 2020 earnings 

 

JPM CEO Jamie Dimon is also chairman of the Business Roundtable for the Trump administration.

Source: JPM, AlphaStreet

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