JPMorgan Chase, the largest lender in the United States, made $14.5 billion in profit last quarter, a big jump from the same period last year, it reported on Friday. The bank was helped by growth almost across the board, including increases in lending, credit card transactions, as well as relative stability in investment banking. JPMorgan shares were up 3 percent in premarket trading.
It was another quarter of standard financial results, and a reminder that in banking, the rich tend to get richer.
Why It Matters
Because of its size, JPMorgan is a proxy for the banking industry in general. Jamie Dimon, the head of the bank, has deep political connections and his forecasts about the economy are scrutinized in some circles as closely as the musings of a central banker.
In a statement on Friday, Mr. Dimon said the U.S. economy was “resilient,” echoing language he has used several times this year, but listed a litany of risks, including that consumers are burning through their cash buffers and that inflation remains high .
And there were two interesting side notes in the bank’s latest results: Its total deposits fell slightly, an indication that consumers are moving their money elsewhere in an era when higher interest rates have made it easier to find higher-paying investments than in checking accounts. . Separately, but also related to interest rates, last quarter JPMorgan lost $900 million due to investments in US Treasury bonds and mortgage securities, which decreased in value as rates rise – but this was hardly a blemish on its results.
JPMorgan and Mr. Dimon have been all over the news this year, thanks to their prominent role as a proven stabilizing force during the spring banking crisis that brought down three smaller lenders. JPMorgan bought one of those failed banks, First Republic. In an indication of how troubled that institution has become, JPMorgan said Friday it was setting aside $1.2 billion to deal with losses in First Republic’s lending portfolio.
Analysts still expect the acquisition to ultimately prove worthwhile, thanks to First Republic’s wealthy client base and offshore branches, which Friday’s results show are already bolstering JPMorgan’s assets and wealth management.
Next week will see a host of other banks report their quarterly earnings. Among the most closely watched will be Wednesday’s results from Goldman Sachs, which publicly hinted at a disappointing stretch, and regional banks such as Western Alliance and Comerica, which will be looking to prove they have bounced back from their recent troubles.