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The likelihood of a “fairly severe recession” forced JPMorgan Chase, the largest U.S. lender, to boost reserves against delinquent loans by $6.8 billion as the coronavirus pandemic shut down broad swaths of the U.S. economy.
“The first quarter delivered some unprecedented challenges and required us to focus on what we as a bank could do — outside of our ordinary course of business — to remain strong, resilient and well-positioned to support all of our stakeholders,” CEO Jamie Dimon said in a statement.
The buildout in credit reserves helped drag profits from January through March down by 69 percent to $2.87 billion or 78 cents a share, JPMorgan said.
“The banks are hunkering down,” Kenneth Leon, an analyst with CFRA Research, told FOX Business’ Maria Bartiromo. “The question is what is the ability of most borrowers to meet their monthly payments.”
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JPMorgan, which has long touted a “fortress balance sheet,” entered the crisis well-capitalized and has total liquidity resources of more than $1 trillion, Dimon said. Typically among the first of the largest U.S. lenders to report quarterly earnings, JPMorgan is often viewed as an early indicator of Wall Street’s performance.
It was among the standouts of the 2008 financial crisis, working with the government to acquire the beleaguered investment bank Bear Stearns and, later, the floundering consumer lender WaMu.
The bank “has built its reputation on being there for clients, customers and communities in the most critical times,” Dimon said. “This unprecedented environment is no different. We will do everything in our power to help the world recover from this global crisis.”
JPMorgan’s community banking division, its largest, has kept about 75 percent of its 5,000 branches open, with heightened safety procedures to protect customers and employees from infection with the virus, Dimon said.
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