July 14 (Reuters) – JPMorgan Chase & Co on Thursday reported a bigger-than-expected 28% drop in second-quarter profit as it set aside more provisions to cover potential losses amid growing risks of recession.
The JPMorgan title, which has lost nearly 29% since the start of the year, is down about 4% in pre-market trading.
The group recorded 1.1 billion dollars (as many euros) in provisions for loan losses, while last year, 3 billion dollars were released from provisions.
The four largest banks in the United States are expected to book $3.5 billion in loss provisions, bracing for a sharp economic slowdown as the US Federal Reserve makes interest hikes to control runaway inflation.
Jamie Dimon, chief executive of JPMorgan, warned that geopolitical tensions, high inflation, loss of consumer confidence, among others, “are very likely to have negative consequences for the global economy at some point.”
Locally, however, the economy continues to grow and the labor market and consumer spending remain healthy, added Jamie Dimon.
The U.S. bank reported earnings of $8.6 billion, or $2.76 per share, for the quarter ended June 30, below analysts’ average expectation of $2.88 per share, according to data from Refinitiv.
The company has also temporarily suspended its share buybacks to further shore up its capital levels. (Reporting Noor Zainab Hussain and Niket Nishant in Bangalore, David Henry in New York; French version Elena Vardon, editing by Kate Entringer)