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The JPMorgan report shows that the coronavirus pandemic is a factor that is strong enough to significantly dent earnings. JPM stock is in the red now.
Figures have started coming, showing an idea of how the year’s first quarter has been. Because of the coronavirus pandemic, financial markets crashed quite terribly as normal activity ground to a halt. Some of the world’s largest stocks crashed and a lot of wealth owned by the richest people was lost. With all of these losses still in view, JPMorgan Chase & Co (NYSE: JPM), the largest bank in the U.S., has released a report, unsurprisingly disappointing estimates and investors.
Meanwhile, the JPM stock price is falling. At the time of writing, the stock is trading at $97.05 (-1.15%).
JPMorgan’s figures showed that the bank’s earnings were far less than general market estimates. For example, estimates put earnings per share at $1.84, much higher than JPMorgan’s reported 78 cents. Also, it announced a profit of $2.87 billion, which is a whopping 69% crash from figures in the first quarter of 2019. The company’s revenue, however, seemed healthier, as it came to $29.07, only crashing 3%. This is however lower than estimates at $29.67 billion.
The report says the company’s net income for Consumer & Community Banking (CCB) crashed 95% to hit $191 million. Net revenue dropped by 2%, to hit $13.2 billion. For Commercial Banking (CB), net income fell 86%, to $147 million.
In all of the disappointment, the report highlights some increase. Firstly, the bank’s revenue from bond trading surpassed analyst estimates by $1 billion, hitting $5 billion. Revenue from its trading division also jumped to $7.2 billion, a 32% increase.
Report Ties Crash to JPMorgan Cash Reserves
According to company CEO Jamie Dimon in the report, JPMorgan decided to build its credit reserves, because of the effects of the pandemic. Dimon says that the company had a good quarter, regardless of the difficult situation brought about by the coronavirus outbreak.
“JPMorgan Chase performed well in what was a very tough and unique operating environment. In the first quarter, the underlying results of the company were extremely good, however given the likelihood of a fairly severe recession, it was necessary to build credit reserves of $6.8B, resulting in total credit costs of $8.3B for the quarter.”
The report also shows that the bank made provisions for support worth $638 billion. Consumer credit took $63 billion, with $8 billion for small businesses in the U.S. Corporate clients and non-U.S. government entities took $334 billion, and another $20 billion was for non-profit organizations and U.S government entities. This includes hospitals, universities, states and municipalities. Other corporations took $213 billion.
Dimon, in the report, also specified some of JPMorgan’s activities, in helping with the adverse effects of the pandemic.
“JPMorgan Chase made a $50 million commitment to help address the immediate humanitarian crisis, as well as the long-term economic challenges that the most vulnerable people face. And the firm announced a $150 million loan program to help community partners get capital to underserved small businesses and nonprofits, particularly in the hardest-hit communities,” explained he.