That helped send JPMorgan’s profit plummeting 69% in the first quarter. America’s largest bank by assets said its net income fell to $2.9 billion in the first three months of the year, compared to $9.2 billion in the same period last year.
Net revenue dipped slightly to $29.1 billion from $29.9 billion year-over-year.
“The company entered this crisis in a position of strength, and we remain well capitalized and highly liquid,” said Dimon. The bank has $1 trillion of liquidity resources, he added.
The bank extended millions of dollars of new credit in the first quarter and witnessed a record use of revolving credit facilities. Companies drew on their credit lines at “probably twice the rate than in the financial crisis [of 2008],” Dimon said on the earnings conference call.
“I think companies are very rationally getting their liquidity in order ahead of what could be a significant downturn,” he added.
JPMorgan’s economists’ now predict US unemployment will soar to 20% in the second quarter before recovering in the back half of the year, with annualized GDP contracting by 40%.
Dimon said he expects the economy to open up in a staggered way following the crisis.
“In some ways, the sooner the better, but it has to be safe for everybody,” he said.
JPMorgan’s stock was up 1.4% in premarket trading.
Wells Fargo is also bracing for trouble
The bank announced Tuesday a deeper-than-expected 89% plunge in first-quarter profit, driven largely by a $3.1 billion reserve build to protect against bad loans.
The reserve build “reflected the expected impact these unprecedented times could have on our customers,” Wells Fargo CFO John Shrewsberry said in a statement.
Wells Fargo’s provision for credit losses spiked to nearly $4 billion, compared with $845 million the year before. The bank cited “forecasted credit deterioration due to the COVID-19 pandemic.”
Revenue dropped 18% to $17.7 billion, also missing estimates.
Wells Fargo reported a 5% jump in period-end loans to $1 trillion. That growth could accelerate this quarter because the Federal Reserve recently removed penalties on Wells Fargo to free the troubled bank to lend to small businesses.
Deposits also climbed 4% to $1.4 trillion.
Wells Fargo’s results were also hurt by a $950 million impairment of securities “driven by economic and market conditions.” That writedown largely relates to venture capital and private equity partnerships.
The bank’s shares were up 1% in premarket trading.