Jamie Dimon, chief executive of JP Morgan, said the early 2020s were shaping up to be “the most dangerous time the world has seen in decades” as the Wall Street banking giant reported another increase in profit.
Citing geopolitical tensions, “extremely high government debt levels” and the unknown longer-term consequences of quantitative tightening in reducing liquidity, Dimon suggested the global economy faced difficult years ahead.
“The war in Ukraine compounded by last week’s attacks on Israel may have far-reaching impacts on energy and food markets, global trade, and geopolitical relationships,” he warned.
However, he said that “US consumers and businesses generally remain healthy” even if consumers are spending down excess cash buffers accumulated during the pandemic.
Dimon’s comments came after JP Morgan reported net income of $13.2bn in the third quarter, 35 per cent higher than the same period last year.
Revenue meanwhile climbed 22 per cent to $39.9bn largely thanks to a 30 per cent increase in net interest income. Across the year as a whole JP Morgan expects net interest income of $88.5bn, up from previous guidance of around $87bn, and expenses of around $84bn.
Income attributable to First Republic in the quarter was $1.1bn. JP Morgan acquired the bank in April after depositors pulled around $100bn from the bank.
Provisions for credit losses fell 10 per cent year-on-year to $1.4bn. Most analysts had predicted that JP Morgan would increase the funds it sets aside in case loans turn bad.
“We acknowledge that these results benefit from our over-earning on both net interest income and below normal credit costs, both of which will normalize over time,” Dimon said.
The slow performance in investment banking continued, with profit down 12 per cent year on year. Investors are looking out for signs of the green shoots after many bank bosses suggested dealmaking would pick up again towards the end of this year.