JPMorgan Chase & Co. reported first quarter earnings well below Wall Street estimates as the bank was forced to set aside billions in credit reserves amid the risk of a major economic downturn as consumers and businesses struggle to get back on normal footing.
The bank reported first-quarter net income of $2.9 billion or 78 cents a share, less than half of consensus estimates of $1.84 per share.
CEO Jamie Dimon said the bank entered the COVID-19 crisis in a strong position and that the bank remains well capitalized and highly liquid, adding it performed well in 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 severe recession, it was necessary to build credit reserves of $6.8 billion, resulting in total credit costs of $8.3 billion for the quarter,” Dimon said in a press release.
About three-quarters of the bank’s 5,000 branches have remained open during the crisis and the vast majority of the bank’s 16,000 ATMs continued to provide a full range of banking services to customers.
In March the bank opened a half million card accounts for customers and extended more than $6 billion in new and extended credit lines, while remaining active in home lending and auto.
The bank also loaned more than $500 million to small business and is supporting the SBA’s Paycheck Protection Program.
The bank reported a 69% drop in net income in the quarter to $2.9 billion, or 78 cents, compared with year-ago figures. The decreased income was primarily driven by increased reserve builds. Revenue fell 3% to $29.1 billion.
Within its Consumer & Community Banking segment, net income was down 95%, driven primarily by reserve builds. Net revenue within the segment was $13.2 billion, down 2%.
Companies: JPMorgan Chase Bank N.A.