JPMorgan Chase says that first-quarter profit plunged by 69 per cent from a year ago, as the bank set aside billions of dollars to cover potential losses tied to the coronavirus pandemic.
Chase, the nation’s largest bank by assets, is among the first of the nation’s big companies to report how the coronavirus pandemic is impacting its business.
The bank is now facing billions of dollars in losses, as borrowers who were in fine financial shape just weeks ago are now at risk of going broke because the pandemic has shut down businesses across the country and put millions of Americans out of work.
JPMorgan’s profits in the first quarter nearly evaporated due to a substantial increase in credit-loss provisions – that’s money the bank has to set aside to cover potentially bad loans. That figure jumped from $US1.5 billion last year to $US8.29 billion last quarter.
The last time JPMorgan had to set aside that amount of money to cover potentially bad loans was the first quarter of 2009 – in the depths of the Great Recession.
JPMorgan’s CEO Jamie Dimon said it was necessary for the bank to set aside the funds “given the likelihood of a fairly severe recession.”
Overall the bank reported a profit of $US2.87 billion, or 78 cents per share, down from a profit of $US9.18 billion in the same period a year earlier.
The results missed estimates, but analysts had struggled for weeks to figure out how to measure the coronavirus’s impact on companies like JPMorgan and the estimates varied wildly.