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Investment banking revenue for big banks stalled after the Russian invasion of Ukraine in late February. In the first quarter, the total value of pending and completed deals fell to its lowest since the second quarter of 2020, according to Refinitiv data.
The largest U.S. lender, whose fortunes are often seen as a barometer of the health of the economy, reported a 28% drop in investment banking revenue in the first quarter.
Credit costs swung dramatically to $1.46 billion as the company added to reserves for loan losses. A year earlier, JPMorgan (NYSE:JPM) results benefited from a negative provision of $4.16 billion when it drew down extra reserves it had built up during the pandemic.
“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,” Chief Executive Jamie Dimon said in a statement.
The lender also said its board approved a share buyback plan of $30 billion.
JPMorgan posted a profit of $8.28 billion, or $2.63 per share, in the quarter ended March 31, compared with $14.3 billion, or $4.50 per share, a year earlier.
Analysts on average had expected earnings of $2.69 per share, according to Refinitiv. It was not immediately clear if the reported numbers were comparable to estimates.
The big U.S. banks are reporting results at a time when inflation is at its highest in decades, which could lead the Federal Reserve to hike interest rates more aggressively this year.
While that is good for big lenders like JPMorgan, rapid rate hikes could slow down the economy and scupper a nascent recovery from the pandemic.
Net reported revenue fell to $30.72 billion from $32.27 billion a year earlier.
Other large U.S. banks including Citigroup (NYSE:C), Wells Fargo (NYSE:WFC) and Goldman Sachs (NYSE:GS) will report results on Thursday, while Bank of America (NYSE:BAC) reports results next Monday.
