JPM earnings 1Q 2022

JPMorgan Chase said Wednesday that first-quarter profit fell sharply from a year earlier, driven in part by increased costs for bad loans and market upheaval caused by the Ukraine war.

Here are the numbers:

• Earnings: $2.63 a share (not clear if comparable to $2.69 estimate).
• Revenue: $31.59 billion, vs. $30.86 billion estimate, according to Refinitiv.

Profit fell 42% from a year earlier to $8.28 billion, or $2.63 a share, , the New York-based bank said. Revenue fell a more modest 5% to $31.59 billion, exceeding analysts’ estimate for the quarter. Shares of the bank dipped 1.2% in premarket trading.

The company said it took a $902 million charge for building credit reserves for anticipated loan losses and booked $524 million in losses driven by markdowns and widening spreads after Russian’s invasion of its neighbor. Combined, the two factors sapped 36 cents from the quarter’s earnings, the bank said.

CEO Jamie Dimon struck a note of caution in his remarks, saying that built up credit reserves because of “higher probabilities of downside risk” in the U.S. economy.

“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,” Dimon said.

JPMorgan, the biggest U.S. bank by assets, is closely watched for clues to how Wall Street fared during a tumultuous first quarter.

On the one hand, investment banking fees are expected to plunge because of a slowdown in mergers, IPOs and debt issuance in the period. On the other hand, spikes in volatility and market dislocations caused by the Ukraine war may have benefited some fixed income desks.

That means there may be more winners and losers on Wall Street than usual this quarter: Firms that navigated the choppy markets well could exceed expectations after analysts slashed estimates in recent weeks, while others could disclose trading blow-ups.

JPMorgan said last month that its trading revenue dropped 10% through early March, but that turbulence tied to the Ukraine war and sanctions on Russia made further forecasts impossible.

“The markets are extremely treacherous at the moment; there’s a lot of uncertainty,” Troy Rohrbaugh, JPMorgan’s global markets chief, said during the March 8 conference. “The full ramifications of the current conditions are still uncertain.”

Another area of focus for investors is how the industry is taking advantage of rising interest rates, which tend to fatten banks’ lending margins. Analysts also anticipate improving loan growth as Federal Reserve data show banks’ loans grew 8% in the first quarter, driven by commercial borrowers.

Still, while longer-term rates rose during the quarter, short term rates rose more, and that flat, or in some cases inverted, yield curve spurred concerns about a…