Dimon warns of “troubling” pressures that could affect JPMorgan's profits

Jamie Dimon, CEO of JPMorgan Chase, The Federal Reserve on Friday warned of a “troubling” global landscape, highlighting a series of pressures, including war, escalating geopolitical tensions and inflation, that threaten the economy and could impact the performance of the nation's largest bank.

Dimon's comments – which came alongside his bank's quarterly earnings report, which showed weakness in some parts of the business – add to his litany of concerns about the US economy as the Federal Reserve grapples with when or whether to cut interest rates, especially given the conditions… current. In light of hotter than expected inflation data this week.

In a call with reporters on Friday, Mr. Dimon stressed his concern, describing the turbulent financial markets as “very happy.” He said he couldn't predict whether the economy would enter a recession, but “the chance of bad outcomes is higher than people realize.”

Mr. Dimon is the most prominent banking leader. Not only does JPMorgan have exposure to all aspects of the global economy, it is the only major bank head still in existence from the 2008 financial crisis, and his statements are closely followed on Wall Street and Washington. He was the only head of a major US bank to attend the Japanese prime minister's state dinner at the White House this week.

But his gloom was also at constant odds with robust financial markets. In late 2022, for example, expect economic bumps and perhaps a sharp recession next year; Instead, the US economy boomed in 2023.

In fact, Mark Mason, Citigroup's chief financial officer, was speaking on Friday as his bank reported earnings, and he had a relatively rosy take. Mr Mason described the global economy as “resilient” and said that while Citi expected economic growth to slow over the course of the year, strong consumer spending and employment data were reasons for optimism.

JPMorgan reported more than $13 billion in first-quarter earnings and about $42 billion in revenue, both better than analysts had expected. But she said there was a decline in deposits as customers sought to invest their money instead of leaving it in current and savings accounts, and warned of higher expenses in the future. JPMorgan also revealed an unexpectedly sharp decline in so-called net interest income, a closely watched financial metric that essentially measures how much money it can make from lending.

Wells Fargo, the nation's third-largest bank, on Friday separately reported earnings that also included a decline in that measure. It achieved quarterly profits of $4.6 billion, down 7% from the previous year. The bank's average deposits also fell, and the number of new loans it made was lower than last year, partly due to moves by its leaders to limit mortgage lending.

JPMorgan shares fell more than 6 percent on Friday — their worst day in nearly four years — while Wells Fargo shares fell less than 1 percent.

Many economists expected this year to see a so-called soft landing, or a gentle decline in growth and inflation that would allow the Federal Reserve to cut interest rates in an orderly manner.

Now, with little sign of any slowdown, it is unclear whether the central bank will make the three interest rate cuts officials expected for this year. Mr. Dimon was among a few bank leaders who said they were bracing for the possibility of raising interest rates again, a move that would signal more extreme inflation than is currently being measured.

Mr. Dimon made more extended statements about the challenging environment in his annual letter to shareholders this week. He lamented, as he has done before, that the United States had engaged in debt spending and ticked off a list of complaints about where public and private sector leaders had failed. (“Social media can do more,” he wrote.) Pointing to Russia’s invasion of Ukraine and other crises, he wrote that recent events “may create risks that may eclipse anything since World War II.”

He said on Friday that the topic on his mind was “the future of the free world.”

Emily Fletter Contributed to reports.