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JPMorgan Chase posted record profits and an overall boost in revenue in the first quarter, in the face of recent turmoil in the banking sector last month.
The better than expected April 14 earnings report beat most analysts’ estimates for the quarter, as depositors placed their money into the larger banks in the wake of the industry’s crisis.
The bank saw “significant new account opening activity” and deposit inflows, according to CFO Jeremy Barnum. Wells Fargo and Citigroup also saw positive earnings report last week.
JP Morgan’s diversified businesses and trillions of dollars in assets also cushioned it from the crisis that slammed regional and smaller lenders.
America’s largest bank has been watched closely for signs on how the industry is faring, after a series of bank runs led to the collapse of Silicon Valley Bank and Signature Bank in early March.
JPMorgan played a major role in propping up First Republic, which faced a similar fate, by leading efforts to inject it with $30 billion in liquidity.
JP Morgan Surpassed Expectations During Banking Crisis
The banking giant announced a 52 percent boost in overall profits to $12.62 billion, or $4.10 per share, in the first quarter.
This included $868 million in losses on securities, but profits rose 22 cents, when earnings were not taken into account, to $4.32 per share after adjustments.
JP Morgan gained $50 billion in deposits at the end of March, while the rest of the industry saw a 3 percent decline in the first three months of 2023.
The lender’s fixed income trading business also posted $5.7 billion in profits, but equities trading revenue was at $2.7 billion, which was below earlier estimates.
The inflows of liquidity showed “an intra-quarter reversal of the recent outflow trend as a consequence of the March events,” Barnum said.
However, JPMorgan saw a 7 percent decrease in total deposits from a year ago to $2.38 trillion, but the recent inflows allowed deposits to climb by 2 percent when compared with the previous quarter.
Meanwhile, the JP Morgan CFO told shareholders that the bank had increased its forecast for net interest income to $81 billion this year, excluding profits from markets, from an earlier $74 billion.
The Federal Reserve’s hawkish interest rate policies boosted the lender’s net interest income last quarter by 49 percent to $20.8 billion, causing companywide revenue to rise 25 percent to $39.34 billion.
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Barnum explained that the boost was mostly driven by expectations that the lender would have to pay less to depositors later this year if the Fed cuts rates.
Dimon Optimistic on Bank Industry Health
Although the banking sector crisis is far from over, JP Morgan CEO Jamie Dimon expects the disruptions caused by the bank failures last month to eventually pass.
“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,” CEO Jamie Dimon said in a release.
“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,” he explained, adding that the industry could rein in lending as banks become more cautious ahead of a likely recession.
JPMorgan put aside loan loss provisions of $2.3 billion, a 56 percent increase from last year, despite Dimon’s prediction that a recession “may still be pushed off a little bit.”
“You still see sticky inflation and then in front of us issues like higher rates, the war in Ukraine—those are still substantial concerns,” he said.
Although JP Morgan saw growth in earnings, the overall investment banking sector saw revenue tumble by 24 percent to $1.6 billion, as IPO markets started to slacken.
“Our pipeline is relatively robust,” but is still “sensitive to market conditions and the economic outlook,” Barnum said.
“We expect the second quarter and the rest of the year to remain challenging,” he added.
JP Morgan’s retail customers have been slow to pull their money out until recently, unlike its commercial clients, who have been pulling deposits for the past year as interest rates rose.
Retail clients are now trying to gain higher yields, causing deposits in the bank’s retail banking division to drop 4 percent in the first quarter.
Bank Deposits And Loan Markets Still Shaky
Despite a surge of new deposits in the aftermath of the recent bank failures, Barnum warned that the bank could see outflows in the future.
“It’s a competitive market and it’s entirely possible that people temporarily come to us, and then over time, decide to go elsewhere,” Barnum explained, but that the new deposits were not a big factor in JPMorgan’s optimistic projection of a boost in revenue.
Dimon agreed, saying “there’s no pricing power that the bigger banks have.”
Analysts are still waiting to see if JPMorgan and other major U.S. banks will tighten lending standards ahead of an expected recession, which would weaken economic growth this year by making it harder for consumers and businesses to borrow money.
Dimon cautioned that although a banking crisis could cut off loans to businesses and impact consumer spending, the American economy is still robust for now.
Barnum added that while more customers are making late payments, delinquencies are not yet a problem.
The CFO also admitted that the industry could start reducing loans to the commercial real estate sector, but JPMorgan is not looking at changing its underwriting standards there any time soon.
Reuters contributed to this report. Article cross-posted from our premium news partners at The Epoch Times.
Five Things New “Preppers” Forget When Getting Ready for Bad Times Ahead
The preparedness community is growing faster than it has in decades. Even during peak times such as Y2K, the economic downturn of 2008, and Covid, the vast majority of Americans made sure they had plenty of toilet paper but didn’t really stockpile anything else.
Things have changed. There’s a growing anxiety in this presidential election year that has prompted more Americans to get prepared for crazy events in the future. Some of it is being driven by fearmongers, but there are valid concerns with the economy, food supply, pharmaceuticals, the energy grid, and mass rioting that have pushed average Americans into “prepper” mode.
There are degrees of preparedness. One does not have to be a full-blown “doomsday prepper” living off-grid in a secure Montana bunker in order to be ahead of the curve. In many ways, preparedness isn’t about being able to perfectly handle every conceivable situation. It’s about being less dependent on government for as long as possible. Those who have proper “preps” will not be waiting for FEMA to distribute emergency supplies to the desperate masses.
Below are five things people new to preparedness (and sometimes even those with experience) often forget as they get ready. All five are common sense notions that do not rely on doomsday in order to be useful. It may be nice to own a tank during the apocalypse but there’s not much you can do with it until things get really crazy. The recommendations below can have places in the lives of average Americans whether doomsday comes or not.
Note: The information provided by this publication or any related communications is for informational purposes only and should not be considered as financial advice. We do not provide personalized investment, financial, or legal advice.
Secured Wealth
Whether in the bank or held in a retirement account, most Americans feel that their life’s savings is relatively secure. At least they did until the last couple of years when de-banking, geopolitical turmoil, and the threat of Central Bank Digital Currencies reared their ugly heads.
It behooves Americans to diversify their holdings. If there’s a triggering event or series of events that cripple the financial systems or devalue the U.S. Dollar, wealth can evaporate quickly. To hedge against potential turmoil, many Americans are looking in two directions: Crypto and physical precious metals.
There are huge advantages to cryptocurrencies, but there are also inherent risks because “virtual” money can become challenging to spend. Add in the push by central banks and governments to regulate or even replace cryptocurrencies with their own versions they control and the risks amplify. There’s nothing wrong with cryptocurrencies today but things can change rapidly.
As for physical precious metals, many Americans pay cash to keep plenty on hand in their safe. Rolling over or transferring retirement accounts into self-directed IRAs is also a popular option, but there are caveats. It can often take weeks or even months to get the gold and silver shipped if the owner chooses to close their account. This is why Genesis Gold Group stands out. Their relationship with the depositories allows for rapid closure and shipping, often in less than 10 days from the time the account holder makes their move. This can come in handy if things appear to be heading south.
Lots of Potable Water
One of the biggest shocks that hit new preppers is understanding how much potable water they need in order to survive. Experts claim one gallon of water per person per day is necessary. Even the most conservative estimates put it at over half-a-gallon. That means that for a family of four, they’ll need around 120 gallons of water to survive for a month if the taps turn off and the stores empty out.
Being near a fresh water source, whether it’s a river, lake, or well, is a best practice among experienced preppers. It’s necessary to have a water filter as well, even if the taps are still working. Many refuse to drink tap water even when there is no emergency. Berkey was our previous favorite but they’re under attack from regulators so the Alexapure systems are solid replacements.
For those in the city or away from fresh water sources, storage is the best option. This can be challenging because proper water storage containers take up a lot of room and are difficult to move if the need arises. For “bug in” situations, having a larger container that stores hundreds or even thousands of gallons is better than stacking 1-5 gallon containers. Unfortunately, they won’t be easily transportable and they can cost a lot to install.
Water is critical. If chaos erupts and water infrastructure is compromised, having a large backup supply can be lifesaving.
Pharmaceuticals and Medical Supplies
There are multiple threats specific to the medical supply chain. With Chinese and Indian imports accounting for over 90% of pharmaceutical ingredients in the United States, deteriorating relations could make it impossible to get the medicines and antibiotics many of us need.
Stocking up many prescription medications can be hard. Doctors generally do not like to prescribe large batches of drugs even if they are shelf-stable for extended periods of time. It is a best practice to ask your doctor if they can prescribe a larger amount. Today, some are sympathetic to concerns about pharmacies running out or becoming inaccessible. Tell them your concerns. It’s worth a shot. The worst they can do is say no.
If your doctor is unwilling to help you stock up on medicines, then Jase Medical is a good alternative. Through telehealth, they can prescribe daily meds or antibiotics that are shipped to your door. As proponents of medical freedom, they empathize with those who want to have enough medical supplies on hand in case things go wrong.
Energy Sources
The vast majority of Americans are locked into the grid. This has proven to be a massive liability when the grid goes down. Unfortunately, there are no inexpensive remedies.
Those living off-grid had to either spend a lot of money or effort (or both) to get their alternative energy sources like solar set up. For those who do not want to go so far, it’s still a best practice to have backup power sources. Diesel generators and portable solar panels are the two most popular, and while they’re not inexpensive they are not out of reach of most Americans who are concerned about being without power for extended periods of time.
Natural gas is another necessity for many, but that’s far more challenging to replace. Having alternatives for heating and cooking that can be powered if gas and electric grids go down is important. Have a backup for items that require power such as manual can openers. If you’re stuck eating canned foods for a while and all you have is an electric opener, you’ll have problems.
Don’t Forget the Protein
When most think about “prepping,” they think about their food supply. More Americans are turning to gardening and homesteading as ways to produce their own food. Others are working with local farmers and ranchers to purchase directly from the sources. This is a good idea whether doomsday comes or not, but it’s particularly important if the food supply chain is broken.
Most grocery stores have about one to two weeks worth of food, as do most American households. Grocers rely heavily on truckers to receive their ongoing shipments. In a crisis, the current process can fail. It behooves Americans for multiple reasons to localize their food purchases as much as possible.
Long-term storage is another popular option. Canned foods, MREs, and freeze dried meals are selling out quickly even as prices rise. But one component that is conspicuously absent in shelf-stable food is high-quality protein. Most survival food companies offer low quality “protein buckets” or cans of meat, but they are often barely edible.
Prepper All-Naturals offers premium cuts of steak that have been cooked sous vide and freeze dried to give them a 25-year shelf life. They offer Ribeye, NY Strip, and Tenderloin among others.
Having buckets of beans and rice is a good start, but keeping a solid supply of high-quality protein isn’t just healthier. It can help a family maintain normalcy through crises.
Prepare Without Fear
With all the challenges we face as Americans today, it can be emotionally draining. Citizens are scared and there’s nothing irrational about their concerns. Being prepared and making lifestyle changes to secure necessities can go a long way toward overcoming the fears that plague us. We should hope and pray for the best but prepare for the worst. And if the worst does come, then knowing we did what we could to be ready for it will help us face those challenges with confidence.
