JPMorgan Chase & Co (JPM) posted weaker-than-expected first quarter earnings Wednesday as the bank set aside nearly $1 billion to cover potential losses linked to surging inflation and the war in Ukraine.
JPMorgan said earnings for the three months ending in March were pegged at $8.3 billion, or $2.63 per share, down 42% from the same period last year and 6 cents shy of the Street consensus forecast of $2.69 per share. The bank also built $902 million in reserves to set against bad loans and credit losses linked to both surging domestic inflation and the Russia's war on Ukraine, the bank said.
CEO Jamie Dimon cautioned earlier this month that the impact of the Russia-Ukraine conflict on the bank's profits, while also warning that rate hikes from the Federal Reserve "could be significantly higher than the market expects' between now and the end of the year.
Managed revenues, JPMorgan said, fell 4.6% from last year to $31.6 billion, firmly ahead of analysts' estimates of a $30.972 billion tally, while net interest income rose 7% to $14 billion.
"We remain optimistic on the economy, at least for the short term – consumer and business balance sheets as well as consumer spending remain at healthy levels – but see significant geopolitical and economic challenges ahead due to high inflation, supply chain issue and the war in Ukraine,” Dimon said Wednesday.
"Our focus this quarter remained on helping our clients navigate difficult markets and unpredictable events, which included working with governments to implement economic sanctions of unprecedented complexity," he added. "While our company will continue to deal with this global turmoil, our hearts go out to the extreme suffering of the Ukrainian people and to all of those affected by the war.”
JPMorgan shares were marked 3.1% lower in early trading immediately following the earnings release to change hands at $127.50 each, a move that would extend the stock's year-to-date decline to around 21.5%.
Global merger activity fell more than 20% from last year's SPAC-fueled first quarter frenzy, data from Refinitiv indicated earlier this month, with the total value of transactions pegged at around $1 trillion, highlighted by Microsoft's (MSFT) $69 acquisition of video game maker Activision Blizzard (ATVI).
