JPMorgan Chase & Co. (JPM), the largest U.S. bank by assets, is the first among a lineup of mega banks to unveil first quarter results this week as earnings season kicks off.
The company has been a strong outperformer in the banking sector, which lagged the broader market meaningfully this year amid concerns over U.S. bank ties to Russia and worries of an economic slowdown. Still, shares of JPMorgan are down 18.7% year to date.
JPMorgan released its quarterly results Wednesday. Here were the key figures versus expectations, according to analysts polled by Bloomberg.
Revenue (adjusted): $31.59 billion vs. $31.44 billion expected, $30.35 billion in Q4
Earnings per share (adjusted): $2.63 per share vs. $2.72 expected, $3.33 per share in Q4
Wednesday’s report reflected a lackluster quarter for the banking powerhouse following a volatile start to the year on Wall Street as the Russia-Ukraine war and economic uncertainty weighed on markets.
JPMorgan reported a lower-than-expected net income for the first quarter of $8.3 billion, or $2.63 per share, down 42% from the same period in 2021 when the bank posted a profit of $14.3 billion, or $4.50 per share.
Investment banking also came in short of analyst estimates at $2.1 billion versus $2.25 billion expected as geopolitical tensions in Eastern Europe stalled deal activity in the first quarter. Investment banking fees were down 31% due to lower equity and debt underwriting activity, the bank said, marking the lowest fees recorded since the first quarter of 2021.
Shares of JPMorgan were down 1% in pre-market trading to $130.10 as of 7:28 a.m. ET.
“We remain optimistic on the economy, at least for the short term but see significant geopolitical and economic challenges ahead due to high inflation, supply chain issues and the war in Ukraine,” CEO Jamie Dimon said in a statement.
The banking giant also reported adding $902 million in credit reserves for potential loan losses, warning of “higher probabilities of downside risks.”
In the same quarter last year, bank profits benefited significantly from strong dealmaking activity and the release of funds set aside for potential COVID losses.
The bank reported improving loan growth, with average loans up 5%.
Among metrics that will be closely watched by investors this year is the company’s net interest income (NII), the difference between the bank’s earnings on its lending activities and interest it pays to depositors. The figure stands to benefit from higher interest rates, but if the Federal Reserve hikes rates too aggressively and tips the economy into a recession JPMorgan’s lending activity may take a hit.
Net interest income during the first quarter was $14.0 billion, up 7%, the bank reported, citing balance sheet growth and higher rates.
After the first quarter results, JPMorgan CEO Jamie Dimon is expected to share his views on geopolitical risk and the Fed’s monetary tightening plans. The bank chief warned in his closely-read annual letter to shareholders earlier this month that Russia’s ongoing invasion of Ukraine is expected to meaningfully slow the U.S. and global economy.
Dimon will also likely face questions about remarks he made regarding JPMorgan’s $1 billion loss over time due to the war. He did not elaborate on an exact time frame or how the estimate was calculated, but a spokesperson for JPMorgan told Yahoo Finance following the release of Dimon’s letter that the loss could be related to potential distressed assets impacted by the war.
Although the bank said it is not worried about its direct exposure to Russia, the institution is concerned about the “secondary and collateral effects” the crisis and sanctions pose on so many companies and countries.
This post is breaking. Please check back for updates.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
Read the latest financial and business news from Yahoo Finance
Follow Yahoo Finance on Twitter, Instagram, YouTube, Facebook, Flipboard, and LinkedIn