JPMorgan Q1 Earnings Fall 69% as Virus Hits Loan, Derivatives Books
Investing.com
Published Apr 14, 2020 06:51AM ET
Updated Apr 14, 2020 07:25AM ET
JPMorgan Earnings, Revenue Miss in Q1
By Geoffrey Smith
Investing.com - JPMorgan's (NYSE:JPM) earnings plunged in the first quarter as the bank was forced to make huge provisions against bad loans arising from the Covid-19 pandemic.
The bank said net income fell 69% from a year earlier to $2.87 billion, or 78c share, on a 3% drop in revenue to $29.07 billion. That was due largely to $6.8 billion in provisions against possible losses on its loan book, along with $951 million of losses related to funding spread widening on derivatives and $896 million of markdowns in the so-called 'bridge books'. While retail loans accounted for $4.4 billion of the reserves, the bank also set aside $2.4 billion for corporate loans, with the largest impacts in the oil & gas, real estate, and consumer and retail industries.
Total credit costs for the quarter were $$8.3 billion.
Analysts polled by Investing.com anticipated EPS of $2.28 on revenue of $29.53 billion.
“The company entered this crisis in a position of strength, and we remain well capitalized and highly liquid," CEO and chairman Jamie Dimon said in a statement. He pointed to a common equity tier 1 capital ratio of 11.5% and total liquidity resources of over $1 trillion. The CET1 ratio was down from 12.5% three months earlier.
The bank's core lending business was badly affected by the collapse in consumer confidence toward the end of the quarter. Home loans were down 15% as of March 31,
JPMorgan shares are down 29% from the beginning of the year, and are down 30.41% from their 52 week high of $141.10 set on January 2. They are under-performing the Dow 30 which is down 18.3% year to date.
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