Despite JPMorgan Chase posting record revenues of $38.3 billion for the past three months, CEO Jamie Dimon is still worried about future financial disruptions.
“The U.S. economy continues to be on generally healthy footings—consumers are still spending and have strong balance sheets, and businesses are in good shape,” said Dimon in a statement regarding JPMorgan’s first quarter earnings. “However, 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.”
JPMorgan’s profits totalled $12.6 billion, up 52 percent from the same period in 2022, despite setting aside $2.3 billion as a provision for credit losses, 53 percent more than the year prior.
The company also reported a net interest income of $20.8 billion, a 49 percent increase on JPMorgan’s difference between interest revenues and expenses which it said was predominantly driven by a hike in interest rates from the Federal Reserve.
These same hikes also influenced the recent collapse of Silicon Valley Bank earlier this year and the subsequent failures of New York’s Signature Bank and San Francisco’s First Republic, which constituted the largest U.S. banking failure since 2008.
According to Dimon, the current banking turmoil is significantly different to the 2008 crisis, “as it has involved far fewer financial players and fewer issues that need to be resolved.”
Should we expect continued hikes in inflation and interest rates?
However, during a JPMorgan earnings call today (April 14), he urged against an overhaul of regulation for big banks in light of SVB’s collapse. “We’re hoping that everyone just takes a deep breath and looks at what happened and the breadth and depth of regulation that’s already in place,” said Dimon. “It doesn’t have to be a revamp of the whole system, it’s just recalibrating things the right way,” he said, adding that drastic changes could weaken community and regional banks.
In an attempt to address issues contributing to SVB’s failure, the Federal Reserve said it is considering strengthening capital and liquidity standards for big banks and and enhancing its “stress test” analysis, which examines how large banks respond to economic crises.
Dimon also warned of the potential for “sticky” or continued higher inflation, and ensuing higher interest rates. “People need to be prepared— they shouldn’t pray that they don’t go up, they should prepare for them going up,” said Dimon. “And if it doesn’t happen, serendipity.”
Dimon, who has an estimated net worth of $1.6 billion, according to Forbes, previously warned that the current banking crisis is far from over in his annual letter to shareholders. He became JPMorgan’s CEO in 2005 after holding positions at American Express, Commercial Credit and Citigroup.
He’s also been public about his distaste for remote work, and earlier this week asked senior bankers to return to the office full-time. “They have to be visible on the floor, they must meet with clients, they need to teach and advise, and they should always be accessible for immediate feedback and impromptu meetings,” read a JPMorgan memo to managing directors, as reported by Reuters. “There are a number of employees who aren’t meeting their in-office expectations, and that must change.”