Bank puts $902 million in its rainy-day fund

Jpmorgan Chase, the nation’s biggest bank, set aside $902 million in its rainy-day fund as it braced for potential losses from several powerful forces that could pummel the economy.

Inflation surging at its fastest pace since 1981, snarled supply chains and the war in Ukraine are clouding the economic outlook, Jpmorgan CEO Jamie Dimon said in a statement Wednesday. The lender reported first-quarter profits of $2.63 a share, down 42% from a year earlier and short of analysts’ estimate of $2.69 a share.

“There’s a very strong underlying economy, consumers have plenty of money” and businesses are in good shape, Dimon told journalists on a conference call. But that economic health probably will be tested next year by the “powerful forces” of inflation, higher interest rates and the consequences of war in Ukraine.

“I’m not predicting a recession, but is it possible? Absolutely,” Dimon said.

Jpmorgan, which is winding down its business in Russia, is “working with governments to implement economic sanctions of unprecedented complexity,” Dimon said. In the first quarter, it lost about $300 million to $400 million linked to Russia and earmarked additional reserves for its exposure to the country.

Earnings fell at the bank’s Main Street and Wall Street divisions. Net income for its consumer unit fell 57% to $2.9 billion, and corporate and investment banking earnings slumped 26% to $4.4 billion, as fees from underwriting stocks and bonds fell. Trading revenue slid 3% to $8.8 billion versus a blockbuster quarter in 2021.

The company’s stock fell nearly 3%. It has fallen 19% this year, compared with an 11% drop in a broader index of banking shares. JPMORgan is the first of the U.S. banking giants to report earnings this week. It will be followed Thursday by Wells Fargo, Goldman Sachs, Morgan Stanley and Citigroup.

“I cannot foresee any scenario, at all, where you’re not going to have a lot of volatility in markets going forward,” Dimon said. “There’s almost no chance you won’t have volatile markets.”