JP MORGAN, America’s mightiest bank, set aside more than $10 billion to deal with credit losses for the last three months it revealed today.
While the bank led by Jamie Dimon can comfortably weather the Covid-19 economic storm, there are fears that smaller lenders will struggle.
The size of JPM’s write off - £8.4 billion - will raise concerns about how great the losses from Covid loans could be.
Banks on both sides of the Atlantic have been under instructions to funnel money to firms to keep them afloat and avoid mass unemployment.
Analysts will be closely watching the size of the write-offs from Goldman Sachs on Wednesday, and Morgan Stanley and Bank of America on Thursday.
Some traders are hoping that the bank figures will be mostly positive, helping stock markets to keep rising. Quint Tatro at Joule Financial told CNBC: “Last week, I think [JPMorgan] became very attractive from a risk-reward standpoint. So we’ll see what they say, it could be the spark that sends the market higher after the banks start reporting.”
JP Morgan shares are down by a third this year. They opened today in New York at $97, which leaves the bank valued at towards $300 billion.
Second quarter profit at the bank was $4.7 billion, almost half what it was a year ago for the same quarter. Dimon said: "We are prepared for all eventualities as our fortress balance sheet allows to remain a port in the storm."
He added: "We still face much uncertainty regarding the future path of the economy."
