Profits for JPMorgan Chase (JPM) rose 6% in the first quarter to $13.4 billion, beating Wall Street expectations, even as its boss offered some warnings about the road ahead for the US economy.
“Many economic indicators continue to be favorable,” JPMorgan CEO Jamie Dimon said. “However, looking ahead, we remain alert to a number of significant uncertain forces.”
He cited wars and geopolitical tensions, “persistent inflationary pressures” that “may likely continue” and a campaign of quantitative tightening from the Federal Reserve.
“We do not know how these factors will play out, but we must prepare the firm for a wide range of potential environments to ensure that we can consistently be there for clients.”
JPMorgan’s revenue also rose 9%, beating expectations, and its boosted an estimate of net interest income to $89 billion for the full year, excluding trading, up from a previous estimate of $88 billion.
Net interest income is a critical measure for many banks, since it measures the difference between what banks earn on their assets and pay out on their deposits.
JPMorgan’s net interest income in the first quarter was up 11% from the year-ago period but it dropped 4% from the fourth quarter due to “deposit margin compression and lower deposit balances.”
That drop from the fourth quarter could be a source of concern for some investors. Its stock fell more than 2% in pre-market trading.
Net interest income at another giant bank, Wells Fargo (WFC), fell from a year ago as well as the fourth quarter. Its overall profits were down 7% from a year ago but up 34% from the fourth quarter.
The results open the curtain on an earnings season where banks of all sizes will be trying to show that they can remain resilient or even prosper in a year where hopes of lower interest rates from the Federal Reserve appear to be dimming.
JPMorgan and other big banks churned out profits for much of 2023 because higher rates and their industry dominance allowed them to charge more for their loans while keeping funding costs relatively low.
JPMorgan last year raked in $49.6 billion in profits, blowing away all rivals and topping its previous record for annual earnings.
It was the most any American bank has ever made in one year.
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