Even as it announced a better-than-anticipated quarterly profit thanks to strong results at its trading unit, JPMorgan said on Friday that it had set aside $1.4 billion and predicts a slight recession.
In premarket trading, shares of the largest U.S. bank dropped by around 3% as it began reporting quarterly results for corporate America, which are anticipated to decline for the first time since the third quarter of 2020.
Despite the fact that consumers were still spending more money than they had, Chief Executive Jamie Dimon noted a variety of economic risks.
“We are still unsure of the full impact of the geopolitical headwinds, such as the conflict in Ukraine, the precarious situation of the energy and food supply, the ongoing inflation, and the unprecedented quantitative tightening.”
In its macroeconomic outlook, JPMorgan noted a little decline that “reflects a slight recession in the central case.”
Corporate leaders battened down the hatches to prepare for a future recession rather than spending on acquisitions, which resulted in a 57% decline in revenue for JPMorgan’s investment banking division during the quarter.
However, market turbulence increased trading revenue as investors restructured bets to navigate a high interest rate environment.
Equity trading revenue was almost steady, the bank reported, despite fixed income markets trading revenue increasing by 12%.
Thanks to the United States Federal Reserve’s tightening of its monetary policy through rate hikes, the bank’s net interest income, excluding markets, increased by 72% to $20 billion.
In contrast to the average estimate of $75.15 billion provided by Refinitiv data, the bank stated that it anticipates 2023 net interest income of $74 billion, excluding markets.
JPMorgan made $11 billion, or $3.57 per share, in profit for the three months that ended on December 31 as opposed to $10.4 billion, or $3.33 per share, in the same period last year.
The company earned $3.56 per share after deduction of items, exceeding the $3.07 average analyst expectation.
