Recession fears spooked markets, but leaders of America’s largest bank said American consumers appeared to be in good financial health.
JPM 6.19%
Chase & Co. Credit losses are expected to remain unusually low through 2023, as customers have yet to exit. Cash balances are getting fatter during the pandemicexecutives said at the bank’s investor day on Monday.
“The big picture, the short-term credit outlook, especially for US consumers, remains strong,” said Chief Financial Officer Jeremy Barnum.
Bank shares jumped Monday, outperforming the broader market. JPMorgan stock closed up about 6%, while the KBW Nasdaq Bank Index gained 4%. Recession fears sent bank stocks selling off this year.
Chief Executive Officer Jamie Dimon said the recession was not out of the question. The economy remains strong due to actions Congress and the Federal Reserve took early in the pandemic to boost it, he said, and that is making for seeing what lies ahead. becomes more difficult.
“It’s another strong economy,” said Mr. Dimon. “If we go into a recession, it could be different from other recessions.”
So far, however, JPMorgan executives say they’ve seen no signs of a problem with the number of loans delinquent early. And while the economic forecast turns worse, it doesn’t expect to add significantly to its loan loss reserves in the current quarter after the market surprised by set aside more money to cover possible losses earlier this year.
Executives warn that lower-income consumers, who make up a smaller portion of their customer base, are starting to feel the effects of hot inflation. Indeed, more and more consumers have low credit scores lagging in payments for auto loans, personal loans and credit cards. Credit reporting company Equifax Inc.
Still, JPMorgan is confident enough financial health of consumers to launch new credit products. Operators have detailed new “buy now, pay later” installment plans for customers using their credit and debit cards. The bank is also strengthening its wealth management services.
While JPMorgan’s consumer business remains in good shape, the outlook for Wall Street operations has turned worse.
Daniel Pinto, chairman of JPMorgan and head of its corporate and investment banking, said fees from investment banking were trending down 45% in the second quarter from a record level a year earlier. due to a decrease in the company’s transaction performance and stock offerings. Still, volatile markets are good for banks: Transaction revenue is likely to grow 15% to 20% during the quarter.
The sell-off continued to beat the major US stock indexes, with the S&P 500 index entering bear market territory for the first time on Friday in more than two years. WSJ’s Caitlin McCabe looks at some of the key drivers behind market volatility. Photo: John Minchillo / Associated Press
Write to David Benoit at [email protected]
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Appeared on May 24, 2022, print edition as ‘JPMorgan Says Consumers Are Doing Well.’
