BREAKINGVIEWS-Jamie Dimon’s actions say even more than his words

By Stephen Gandel

NEW YORK, April 11 (Reuters Breakingviews) - Jamie Dimon is characteristically carrying an umbrella while some of his peers bask in the sunshine. Despite unveiling healthy first-quarter financial results, JPMorgan’s JPM.N boss warned on Friday of “considerable turbulence” in the economy and the mega-bank set aside $3.3 billion for potential quarterly loan losses. Wells Fargo WFC.N fared well, too, but kept provisions flat. Past storms suggest that both will soon be seeking more cover.

JPMorgan moved with the prevailing winds that started the year. Net income increased 9%, powered by its Wall Street business. Fees from buying and selling stock for clients jumped 48% from the same three-month stretch in 2024. Credit card spending also helped the lender generate an overall 18% return on equity. Wells Fargo’s earnings per share were up 16% and Morgan Stanley’s MS.N bottom line grew 26%.

The forecast, however, is much cloudier. All the bank results reflect a time before U.S. President Donald Trump imposed a dizzying array of duty rates on imports and then changed his mind, sending markets into disarray and darkening economic outlooks. How financial institutions brace for customers’ bad debt is one of the few tangible guides to their outlooks.

Ever-cautious, JPMorgan is preparing for bad weather. It socked away 75% more than it did a year ago, with Dimon seeing the benefits of possible tax cuts and deregulation under Trump contending with the harmful effects of tariffs, inflation, fiscal deficits, high asset prices and volatility. Wells Fargo said commercial real estate loans were performing better than expected, and CEO Charlie Scharf kept the rainy-day fund at about $930 million.

History suggests that even Dimon may yet reach for a bigger poncho. In the first quarter of 2020, just a week into U.S. pandemic shutdowns, JPMorgan amassed provisions equal to 2.1% of loans, before bumping it to 3.1% the following quarter. As of now, it’s 1.9%. To reach Covid levels would mean stashing nearly $18 billion.

The economic blowback might not turn out as bad as it was five years ago, but it is also far too early to say. Although Dimon was able to influence Trump with financial meteorology words, his shelter-seeking actions speak even louder.

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CONTEXT NEWS

JPMorgan on April 11 reported first-quarter net income of $14.6 billion, a 9% increase from a year earlier and more than analysts had been expecting, with CEO Jamie Dimon saying the economy is “facing considerable turbulence,” including from tariffs.

Investment banking fees increased 12% in the first three months of the year, powered by the equity markets business, while consumer banking revenue increased 4% from the same period a year earlier.

The bank set aside $3.3 billion for credit losses, 75% more than in the first quarter of 2024, and net charge-offs were $2.3 billion, up $376 million, largely from credit card debt.