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Thursday, October 6, 2022

JPMorgan Earnings Fall 42% as Dealmaking Slows From Exceptional 1Q 21

JPMorgan Earnings Fall 42% as Dealmaking Slows From Exceptional 1Q 21
© Reuters JPMorgan Earnings Miss, Revenue Beats In Q1

Investing.com – JPMorgan (NYSE:JPM) said its first-quarter earnings fell 42% on the year in the first quarter, as rising inflation, a fresh wave of Covid-19 and Russia’s invasion of Ukraine all combined to make a difficult comparison with the extraordinary gains of a year earlier.

Earnings per share fell some 3% short of expectations at $2.63, while revenue was broadly in line with expectations at $30.72 billion, down 7% from a year earlier.

However, the bank softened any disappointment by approving a new buyback program of $30 billion.

“We remain optimistic on the economy, at least for the short term – consumer and business balance sheets as well as consumer spending remain at healthy levels – but see significant geopolitical and economic challenges ahead due to high inflation, supply chain issues and the war in Ukraine,” chief executive and chairman Jamie Dimon said in a statement. That caution was reflected in $902 million of net new provisions against possible loan losses, ending a sequence of quarters that has been hallmarked by the release of previous provisions as the pandemic has receded.

The bank also notched a $524 million hit due to the revaluation of various positions as Russia’s invasion of Ukraine sent shockwaves through global commodity and debt markets.

Global dealmaking revenue fell 31% from a year ago, while global markets revenue was down 3%.

In addition to a slowdown in dealmaking and capital markets revenues, the bank’s results also showed signs of strain from the rising interest rate environment and supply chain problems in key sectors of the economy.

Auto loans rose 3% on the year but the bank said the lack of vehicle supply continues to hurt its new loan business, which fell 25%. In Home Lending, originations of $25 billion were down 37%, primarily due to the rising rate environment, it added. That comes at a time when mortgage rates are at their highest since the end of 2018, according to figures released on Wednesday by the Mortgage Bankers Association.

JPMorgan stock is down 16% from the beginning of the year, still down 24% from its 52-week high of $172.96 set on October 25, 2021. It is underperforming the S&P 500, which is down 7.7% from the start of the year.

Stay up-to-date on all of the upcoming earnings reports by visiting Investing.com’s earnings calendar

Source: Investing.com

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