JPMorgan Q1 profit drops 70%
NEW YORK, April 15, (AP): JPMorgan Chase is preparing for the possibility that customers ranging from credit card holders to oil companies could fail to pay back billions of dollars in loans as the economy reels from the coronavirus outbreak.
JPMorgan said Tuesday that firstquarter profit plunged nearly 70%, as it boosted its reserves for potentially bad loans by nearly $7 billion. The bank warned it could boost those reserves even further in the April-June period,
The coronavirus outbreak has shut down businesses across the country and put millions of Americans out of work. Borrowers who were in fine shape just weeks ago are now struggling financially and at risk of defaulting on their loans. The Federal Reserve and the U.S. government are taking unprecedented steps to ensure credit markets can function and to get badly needs funds to households and small businesses.
JPMorgan CEO Jamie Dimon said it was necessary for the bank to set aside significant funds “given the likelihood of a fairly severe recession.” The last time JPMorgan had to increase the amount in reserve for bad loans to such a degree was the first quarter of 2009 in the depths of the Great Recession.
The nation’s largest bank by assets, JPMorgan said profit fell to $2.87 billion in the first quarter from $9.18 billion in the same period a year earlier. Wells Fargo, the nation’s largest mortgage lender, said profit fell 95% as it boosted bad loan reserves by $3.1 billion.
JPMorgan is one of the nation’s largest credit card issuers. Millions of Americans who lost their jobs are now at risk of defaulting on their credit card accounts. The bank also recorded loan losses in its wholesale lending division from the oil and gas industry and businesses that directly deal with U.S. consumers, such as retailers.