JPMorgan Chase & Co (NYSE:JPM) head Jamie Dimon’s weather forecast in today’s first-quarter earnings call warned of gathering storm clouds on the horizon of the banking sector, sparking anxieties that the March mini-crisis has yet to fully blow over.
“The storm clouds that we have been monitoring for the past year remain on the horizon, and the banking industry turmoil adds to these risks,” Dimon said told shareholders.
Dimon predicted that “financial conditions will likely tighten as lenders become more conservative”, though he was unsure if this would lead to slow consumer spending.
These clouds didn’t exactly rain on JP Morgan’s parade though; America’s biggest bank reported a 52% increase in profit to US$12.6bn in the first quarter, while revenues climbed 80% to US$5.2bn in its consumer and community banking unit.
Its Wall Street investment arm, however, was weighed down by a cold spell in the M&A market, but shares rallied 7.3% following the earnings call.
The bank boosted its guidance for net interest income after reporting a sharper-than-expected increase in deposits.
Dimon said the recent mini-crisis in the financial sector “has involved far fewer financial players and fewer issues that need to be resolved” than in 2008, and also offered a ray of light alongside his stark forecast: “The US economy continues to be on generally healthy footings… consumers are still spending and have strong balance sheets, and businesses are in good shape.”
Seeking to assuage shareholder fears, Dimon added: “While we hope these clouds will dissipate, the firm is prepared for a broad range of outcomes, and we are confident that we can serve the needs of our customers and clients in all environments."