What to Learn from the JPMorgan’s First-Quarter Earnings Report
JPMorgan Chase started off this year’s earnings season with some less than welcome news: The bank’s first-quarter profit fell 42% from a year ago, driven lower by Russia’s invasion of Ukraine, high levels of inflation, and increasing supply chain problems.
CFO Jeremy Barnum told reporters Wednesday that the bank lost an additional $120 million in the first quarter on nickel trading chaos that roiled the London Metals Exchange in March. JPMorgan had bankrolled Chinese miner Tsingshan Holding Group, a company that got caught in a short squeeze that topped $15 billion at its highest point. JPMorgan also posted a profit of $8.3 billion, or $2.63 per share in the first quarter of 2022, compared with $14.3 billion, or $4.50 per share the year prior. The largest US bank by assets is often viewed as a bellwether for the rest of Wall Street.
Analysts expected earnings of $2.69 per share, according to Refinitiv. CEO Jamie Dimon warned of serious risks for the US economy ahead in his uncharacteristically brief remarks.
“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” he said.
When asked during a call with the press, Dimon elaborated that an upcoming recession is “absolutely” possible, but he wouldn’t go so far as to predict the timing. The bank also reported a 28% drop in investment banking revenue in the first quarter. Investment banking fees fell by 31% because of lower equity and debt underwriting activity, the bank stated. The bank also reported that its board approved a $30 billion share buyback. Shares fell 1.1% in premarket trading Wednesday.
BlackRock, the world’s largest asset manager, also delivered its first-quarter results Wednesday, with earnings per share at $9.52, beating the $8.79 average estimate of analysts surveyed by Bloomberg. The company reported revenue of about $4.7 billion slightly below analyst estimates of about $4.8 billion.
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