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JPMorgan Q1 Earnings Slump as Coronavirus Credit Costs Hit Bottom Line

JPMorgan ended the quarter with $3.14 trillion in assets, but the bank said credit loss provisions rose to $8.3 billion, a near seven-fold increase from the same period last year.

JPMorgan Chase & Co  (JPM) - Get JP Morgan Chase & Co. Report posted notably weaker first quarter earnings Tuesday as coronavirus-related charges trimmed the bottom line of the biggest U.S. lender.

JPMorgan said earnings for the three months ending in March were pegged at 78 cents per share, down nearly 63% from the same period last year and firmly south of the last Street forecast of $1.99 per share. Group revenues fell 4.4% to $28.3 billion, the bank said.

Corporate and investment banking charges topped $951 million for the quarter, JPMorgan said, as a near $900 million charge linked to a program of inter-company bridge loans lowered its first quarter earnings by 22 cents. JPMorgan also boosted its capital buffer, which cushions the bank against potential losses, in order to absorb an estimated $8.3 billion wave of credit losses. 

"The first quarter delivered some unprecedented challenges and required us to focus on what we as a bank could do - outside of our ordinary course of business - to remain strong,resilient and well-positioned to support all of our stakeholders," said CEO Jamie Dimon.

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“I want to thank our more than 250,000 employees for remaining steadfast in helping ourclients, customers, communities and governments and continuing to operate with the highest standards everyday," Dimon added. "I’m proud of the extraordinary effort by our call center employees, traders, bankers, portfolio managers,technology and operations teams across the globe."

JPMorgan shares were marked 2.83% higher in early trading following the earnings release to change hands at $100.96 each.

Last week, Dimon said the bank's 2020 earnings will fall "meaningfully' from last year's $36.4 billion total, and cautioned that the board could suspend the regular quarterly dividend while noting that loan commitments are likely to accelerate in order to support the real economy.

"We have run an extremely adverse scenario that assumes an even deeper contraction of gross domestic product, down as much as 35% in the second quarter and lasting through the end of the year, and with U.S. unemployment continuing to increase, peaking at 14% in the fourth quarter," Dimon said in his annual letter to shareholders.

"Even under this scenario, the company would still end the year with strong liquidity and a CET1 ratio of approximately 9.5%," he added. "This scenario is quite severe and, we hope, unlikely. If it were to play out, the Board would likely consider suspending the dividend even though it is a rather small claim on our equity capital base. If the Board suspended the dividend, it would be out of extreme prudence and based upon continued uncertainty over what the next few years will bring."