JPMorgan profits up, but interest rates remain a threat

JPMorgan profits up, but interest rates remain a threat

The United States’ biggest lender JPMorgan Chase posted a profit of $14.5 billion last quarter, a huge jump from the same period last year, reported Friday. The bank was helped by growth virtually across the board, including growth in lending, credit-card transactions as well as relative stability in investment banking. JPMorgan’s stock was up 3 percent in premarket trading.

It was another quarter of banner financial results, and a reminder that in banking, the rich get richer.

Given its size, JPMorgan is a proxy for the banking industry at large. The bank’s chief executive, Jamie Dimon, has deep political ties and his forecasts on the economy are scrutinized in some circles as closely as those of a central banker.

On Friday, in a statement, Mr Dimon said the US economy was “resilient”, language he has used repeatedly this year, but also listed a number of risks, including that consumers may run out of their cash buffers. are burning through and inflation remains high.

And there were two interesting side-notes in the bank’s latest results: Its total deposits declined slightly, a sign that consumers are moving their cash elsewhere in an era when higher interest rates have made checking accounts more expensive than checking accounts. Finding paying investments made easy. , Separately, but also related to interest rates, last quarter JPMorgan lost $900 million on investments in U.S. Treasury bonds and mortgage-backed securities, which have declined in value as rates rise — but this is not the first of its kind. There was barely a dent in the results.

JPMorgan and Mr. Dimon have been all over the news this year, thanks to their major role as a stabilizing force during the banking crisis of the spring that toppled three smaller lenders. JPMorgan bought one of those failed banks, First Republic. In a sign of just how troubled the institution has become, JPMorgan said Friday it was setting aside $1.2 billion to deal with losses in First Republic’s loan portfolio.

Analysts are still hopeful that the acquisition will ultimately prove worthwhile, thanks to First Republic’s base of wealthy clients and coastal branches, which JPMorgan’s asset and wealth management arms are already buoyed by Friday’s results. .

Several other banks will report their quarterly earnings next week or so. Most eyes will be on Wednesday’s results from Goldman Sachs, which has publicly signaled a bleak situation, and regional banks such as Western Alliance and Comerica, which will look to prove they have recovered from their recent troubles.

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