JPMorgan Chase Q2 results fall below expectations

JPMorgan Chase reported on Thursday that the bank's second-quarter profit fell as it increased reserves for bad loans by $428 million while discontinuing share repurchases.

In a statement, he said that the American economy is still booming and that the employment market, consumer spending, and consumers' purchasing power are all stable.

The war in Ukraine and its detrimental effects on global energy and food prices, along with geopolitical tension, high inflation, declining consumer confidence, uncertainty over how high interest rates must go, previously unseen quantitative tightening, and their impact on global liquidity, are all likely to have negative future effects on the global market, according to Dimon.

In light of this, JPMorgan has decided to "temporarily" halt its share buybacks in order to meet regulatory capital requirements, a development that alarmed analysts earlier in the year. The bank was compelled to maintain its dividend last month as competitors increased their rewards.

The bank's stock plummeted 2.5% in premarket trading.

In comparison to expectations, the bank performed as follows, according to a Refinitiv survey of analysts:

·        $2.76 earnings per share compared to $2.88 projected

·        Managed revenue was $31.63 billion vs the projected $31.95 billion.

The reserve increase was mostly to blame for the profit fall of 28% from a year ago to $8.65 billion, or $2.76 per share, according to a statement from the New York-based bank. A year earlier, the bank profited from a reserve of $3 billion.

According to figures compiled by Refinitiv, managed revenue increased marginally by 1% to $31.63 billion, aided by the positive impact of rising interest rates, although it fell short of analysts' forecasts.

However, analysts have started to lower their profit projections for the industry due to worries about an impending recession, and most significant bank stocks have recently fallen to 52-week lows. Due to the significant reduction in financial asset values, corporations may announce new writedowns in their revenue from mortgages and capital markets operations.

A significant tailwind for the sector last year—reserve releases as loans outperformed expectations—has started to reverse as banks are required to lay aside funds for future defaults as the likelihood of a recession increases.

JPMorgan was the first bank to start putting aside money for loan losses back in April, recording a $902 million charge for increasing credit reserves in the quarter. That complemented Dimon's more sober view that he has been conveying. He issued a warning about an impending economic storm in early June.

Considering this forecast, bank analysts would inquire as to whether management can reduce spending in response to economic conditions.

Through Wednesday, JPMorgan stock had fallen 29 percent, more than the 19 percent slump seen by the KBW Bank Index.

The results of Morgan Stanley's earnings report on Thursday lagged behind those of JPMorgan's and those of Wall Street. A decline in investment banking income affected the bank.