Big banks warn of uncertain year ahead after mixed financial performances in the first quarter

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NEW YORK: Big banks warned of an “uncertain” year ahead after mixed financial results during the first quarter in an environment of stubbornly high inflation and geopolitical clashes in Europe, the Middle East and elsewhere.

JPMorgan reported a modest 6% rise in profits Friday while profits at Wells Fargo and Citigroup declined, though both topped Wall Street expectations.

“Many economic indicators continue to be favorable. However, looking ahead, we remain alert to a number of significant uncertain forces,” JPMorgan CEO Jamie Dimon said, citing the wars in Gaza and Ukraine as well as other geopolitical pressures, high levels of government spending across the world and “persistent inflationary pressures.”

Dimon used language Friday that was similar to what he told investors in his annual shareholder letter earlier this week. In that letter, Dimon warned that geopolitical events including the war in Ukraine and the Israel-Hamas war, as well as U.S. political polarization, could be creating an environment that “may very well be creating risks that could eclipse anything since World War II.”

Dimon’s shareholder letter on Monday seemed prophetic two days later when the U.S. released hotter-than-expected inflation data for March, putting uncomfortably high consumer prices back at the top of agenda for policymakers, particularly President Joe Biden in his bid for a second term in the White House.

In call with reporters, Citigroup executives echoed Dimon’s comments. Mark Mason, Citi’s chief financial officer, said that while the bank still sees an economic soft landing — where inflation cools while keeping the economy growing — risks to the economy abound.

“The global economy seems to be resilient,” Mason said, but that the bank remains concerned about inflation and what will happen as interest rates remain elevated for a longer period of time.

JPMorgan, the nation’s largest bank, earned a profit of $13.42 billion, or $4.44 a share, compared with a profit of $12.62 billion, or $4.10 a share, in the same period a year earlier. JPMorgan’s results were pulled lower by a $725 million one-time charge for an assessment by the Federal Deposit Insurance Corporation.

While it topped analyst expectations, shares of JPMorgan fell more than 5% Friday after the bank released conservative full-year projections for net interest income. That forecast largely reflects the bank’s expectation that the Federal Reserve will cut interest rates later this year.

Most metrics of JPMorgan’s business were solid for the quarter. While investment banking revenues were largely flat, the bank reported an uptick in activity. In its consumer bank, profits rose 6% and the bank set aside less money to cover potentially bad loans.

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