JPMorgan takes $524 million hit from Russia and suffers Q1 revenue slowdown as investment banking fees slump
- JPMorgan took a $524 million hit from losses on assets tied to Russia in the first quarters, its earnings report showed Wednesday.
- The bank also suffered a slowdown in first-quarter revenue, as investment banking fees fell sharply.
JPMorgan took a $524 million hit from assets tied to Russia in the first quarter and suffered a slowdown in revenue as investment banking activity cooled, its earnings report showed Wednesday.
The bank's managed revenue fell 4.6% year-on-year to $31.59 billion in the first quarter, but nonetheless beat analysts' expectations of $31.44 billion. Earnings per share fell 41.8% to $2.63 from a year earlier, coming in below estimates of $2.72.
Investment banking revenue tumbled 27.9% year-on-year to $2.06 billion as market volatility took a toll on activities such as dealmaking and underwriting initial public offerings.
JPMorgan said it was taking a first-quarter hit of $524 million in its investment banking arm as it repriced assets and suffered losses as a result of sanctions on Russia. It is one of hundreds of Western companies that have pledged to pull out of the country following Vladimir Putin's invasion of Ukraine.
CEO and Chairman Jamie Dimon said the bank "sees significant geopolitical and economic challenges ahead due to high inflation, supply chain issues and the war in Ukraine."
Yet he also said: "We remain optimistic on the economy, at least for the short term – consumer and business balance sheets as well as consumer spending remain at healthy levels."
The Wall Street giant's shares were down 0.71% in pre-market trading, as investors digested the Q1 earnings report.
Here are the key numbers:
- Adjusted revenue: $31.59 billion vs. $31.44 billion prediction from analysts polled by Bloomberg
- Diluted earnings per share: $2.63 vs. $2.72 analyst consensus
- Net income: $8.28 billion vs. $8.54 billion analyst consensus
JPMorgan Chase is the biggest bank in the US and its financial results are seen as a sign of the strength of the country's — and even the world's — economy.
It posted a record profit of $48.3 billion in 2021 as stimulus boosted the economy and markets. A boom in dealmaking generated huge fees for JPMorgan's investment bankers, and trading activity remained buoyant after a strong 2020.
Yet the bank's shares have fallen around 17% so far this year as investors have fretted about a slowdown in economic growth as a result of the Federal Reserve hiking interest rates and the conflict in Ukraine. Dealmaking has slowed as markets have become more volatile.
JPMorgan kicked off the financial first-quarter earnings season Wednesday, with asset manager BlackRock also reporting. Citigroup, Goldman Sachs, Morgan Stanley and Wells Fargo are set to release earnings Thursday.