JPMorgan Chase & Co. operates as a financial services company worldwide. It operates through four segments: Consumer & Community Banking (CCB), Corporate & Investment Bank (CIB), Commercial Banking (CB), and Asset & Wealth Management (AWM). The CCB segment offers s deposit, investment and lending products, payments, and services to consumers; lending, deposit, and cash management and payment solutions to small businesses; mortgage origination and servicing activities; residential mortgages and home equity loans; and credit card, auto loan, and leasing services. The CIB segment provides investment banking products and services, including corporate strategy and structure advisory, and equity and debt markets capital-raising services, as well as loan origination and syndication; payments and cross-border financing; and cash and derivative instruments, risk management solutions, prime brokerage, and research. This segment also offers securities services, including custody, fund accounting and administration, and securities lending products for asset managers, insurance companies, and public and private investment funds. The CB segment provides financial solutions, including lending, payments, investment banking, and asset management to small business, large and midsized companies, local governments, and nonprofit clients; and commercial real estate banking services to investors, developers, and owners of multifamily, office, retail, industrial, and affordable housing properties. The AWM segment offers multi-asset investment management solutions in equities, fixed income, alternatives, and money market funds to institutional clients and retail investors; and retirement products and services, brokerage, custody, trusts and estates, loans, mortgages, deposits, and investment management products. The company also provides ATM, online and mobile, and telephone banking services. JPMorgan Chase & Co. was founded in 1799 and is headquartered in New York, New York. The company is publicly listed on NYSE under the ticker “JPM”.
J.P.Morgan Chase, from now on “JPM” for readability reasons, one of the biggest banks in the United States. As the whole market, the company has also had a rough start of the year.
As inflation continues to rise, and interest rates are being raised to fight it, the benefit that JPM can have from the higher interest revenue is more or less balanced by the higher labor costs. It’s curious because banks have long wished higher interest rates, but now that they are here, banks are struggling. At the time of writing, the bank is down almost 20% year-to-date, already under the pre-covid levels, thanks to the latest after-earnings drop. Indeed, during the first quarter of 2022, JPM’s revenue fell 5% to $30.72 billion, ahead of analyst expectations for $30.59 billion, but profits are expected to decline across the banking industry. After the announcement of these results, shares fell 3.2%, and continued to fall over the next days. On the other hand, that’s easily explained considering that their pandemic boom ended with a 42% drop in profits, or $8.3 billion, warning that rising inflation and the war in Ukraine pose already significant threats to the future of U.S. economy. While the CEO Jamie Dimon said the economy is strong and growing, citing double-digit growth in card spending, low delinquencies and healthy household and consumer balance sheet, his company set aside $900 million in new funds to prepare for economic turmoil: these extra funds could cushion the bank if the economy tips into recession, sending loan defaults higher. Considering that J.P.Morgan Chase has an almost unparalleled view of the U.S. economy, with a window into the finances of American households and many small and big businesses, this should concern us all for the short- to mid-term. Of the $900 million set aside for potential future losses, about one-third was tied to Russia, while the rest is to account for the risk that interest-rate increases could cause the economy to slow too much, resulting in a recession.
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