JPMorgan earnings fall 42% as bank writes off Russian assets

NEW YORK (AP) — JPMorgan Chase said its first-quarter profits fell 42% year over year, in part because the bank lost nearly $1.5 billion in assets due to higher inflation and the Russo-Ukrainian war – Dollar has written off.

The country’s largest bank by assets said it posted profit of $8.3 billion, or $2.63 per share, compared to profit of $14.3 billion, or $4.50 -dollars per share in the same period last year. The results missed forecasts by Wall Street analysts, who expected JPMorgan to earn $2.72 per share, according to FactSet.

Much of JPMorgan’s earnings decline was due to the bank releasing more than $4 billion in credit reserves linked to the improving economy and the easing COVID-19 pandemic the year before. For over a year, JPMorgan and other banks had released the funds they had stashed to cover potentially bad loans. These releases had boosted the bank’s profits significantly, but investors knew that these one-time jumps in profits were only temporary.

Now JPMorgan is going the opposite way. The bank set aside $1.46 billion to write down its Russia-linked assets as well as assets exposed to persistently higher inflation. The bank said most of Russia’s exposure is in its investment banking arm as well as its wealth management business.

“We remain optimistic on the economy, at least in the short term – consumer and corporate balance sheets and consumer spending remain at healthy levels – but see significant geopolitical and economic challenges ahead in Ukraine due to high inflation, supply chain issues and the war,” the chairman said and JPMorgan Chase CEO Jamie Dimon in a statement.

JPMorgan is the first of the major Wall Street banks to report its first-quarter results. Analysts expect Wall Street to report a modest but noticeable drop in earnings as banks individually report their exposure to Russia. JPMorgan had a modest business in Russia. Citigroup, which had both an investment bank and a consumer banking business, will report its results on Thursday.

The volatility in the markets during the first three months of the year due to the Russian invasion and inflation also had a negative impact on the bank’s trading desks. JPMorgan’s corporate and investment bank saw profits fall 26% year over year. Investment banking revenues and fees fell sharply as companies put deals on hold. Equity and bond trading revenues also declined.

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