JPMorgan posted revenue of $33 billion – $3 billion more than its estimate – off the back of massive surges in trading revenue while setting aside a further $10.5 billion to cope with credit losses. Total markets revenue was $9.7 billion – an increase of 79 per cent – with fixed income markets up 99 per cent and equity markets up 38 per cent, offsetting interest rate headwinds and reduced consumer activity.
“Despite some recent positive [macro-economic] data and significant, decisive government action, we still face much uncertainty regarding the future path of the economy,” said CEO Jamie Dimon. “However, we are prepared for all eventualities as our fortress balance sheet allows us to remain a port in the storm.”
JPMorgan ended the quarter with “massive [loss-absorbing] capacity” in the form $34 billion of credit reserves and total liquidity resources of $1.5 trillion on top of $191 billion of CET1 capital. The bank will continue to pay a dividend unless the economy “deteriorates materially and significantly”.
But CFO Jennifer Piepszak warned that the scale of the stimulus was hiding the true nature of the recession and that May and June would be “easy bumps” ahead of a “moment of truth”.
“We’re not seeing right now what you would typically expect to see in a recession, so the way we have to think about reserving is all about the outlook,” Ms Piepszak said.
Mr Dimon echoed the point, saying that many unemployed people were actually earning more than they had before the recession due to the nature of the stimulus.
“In a typical recession, unemployment goes up, delinquencies go up, charges go up, house prices go down,” Mr Dimon said. “None of that’s true here. Savings are up, incomes are up, home prices are up. You will see the effect of this recession. You’re just not going to see it right away because of all the stimulus.”
