JPMorgan Chase CEO Jamie Dimon issued a strong warning on Friday as the conflict between Israel and Hamas intensifies and the war in Ukraine intensifies.
“The war in Ukraine coupled with last week’s attack on Israel could have profound consequences for energy and food markets, global trade and geopolitical relations. This may be the most dangerous period the world has seen in decades,” he said in a statement. statement Attached is JPMorgan Chase’s third-quarter earnings report.
For his part, experts warn that Israel’s conflict with Hamas could cause oil prices to spike, especially if Iran or other major oil suppliers get involved. Deutsche Bank said earlier this week that the conflict raised the possibility of 1970s-style stagflation – a toxic combination of low growth and high inflation. International benchmark Brent crude oil prices have so far risen 6% in the past week to nearly $90 a barrel.
Dimon has repeatedly warned over the past 18 months that the global economy is facing “dark clouds” – from rising interest rates and inflation to geopolitical tensions and a costly energy transition – but he has always avoided making any comments. Specific recession forecasts. On Friday, he again avoided issuing any dire recession predictions.
However, Dimon has not been shy about expressing concerns about the economy. The CEO said that while consumers remain “healthy,” they are rapidly spending the excess savings they accumulated during the pandemic. He believes that “continued tight labor markets” coupled with “the largest fiscal deficit ever recorded in peacetime” increase the risk of continued inflation and rising interest rates.
Still, despite the looming threat, Dimon noted in the J.P. Morgan report that Earnings Conference Call His bank has managed “robust” loan growth and consumer spending is now back on pre-pandemic trends.
Chief Financial Officer Jeremy Barnum added that there were some “green shoots” emerging in the economy that gave him hope, although the bank’s economists expected a “very mild recession” and the economy Faced with many resistances.
“The overall economic picture, at least for now, looks solid. This perfect deflationary trade is actually happening,” Barnum told analysts on a conference call Friday. “So these are reasons to be optimistic in the short term, but also to be quite cautious.”
Even amid the gloomy economic clouds, JPMorgan Chase’s revenue in the third quarter still increased by 22% year-on-year to US$39.9 billion, and net profit increased by 35% to US$13.2 billion. Both figures topped Wall Street analysts’ consensus estimates as the bank benefited from rising interest rates and the acquisition of First Republic Assets, the regional lender that the Federal Deposit Insurance Corporation took over following its bankruptcy in April.
Despite paying an average of just 2.53% on interest-bearing deposits, JPMorgan has been able to retain depositors during a period of uncertainty for the U.S. economy because many consumers view the bank’s size as a sign of safety. At the same time, rising interest rates have allowed Dimon’s company to significantly increase revenue from its loan portfolio. JPMorgan’s third-quarter net interest income (NII) – the bank’s loan proceeds minus what it pays out to depositors – jumped 30% to $22.73 billion.
Other major U.S. banks, including Wells Fargo and Citigroup, also reported strong results on Friday as rising interest rates fueled increased investment in their nation’s infrastructure.
Wells Fargo’s third-quarter NII increased by 8.3% year-on-year to $13.1 billion, and management raised its full-year NII for 2023. As of noon on Friday, Wells Fargo’s stock price surged more than 3% forecast. They now believe the all-important figure will be 16% higher by 2023 than a year ago, compared with a previous estimate of 14%.
Citigroup’s stock price also rose more than 2.5% as of noon on Friday after the bank reported third-quarter revenue growth of 9% to $20.1 billion. The increase was due to a 17% rise in net interest income due to “higher interest rates and growth in deposit volumes,” as well as higher investment banking fees and trading unit revenue, the bank said in the report. statement.
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