JPMorgan Chase registers 69% drop in net income in Q1 2020

Maria Nikolova

The results for the first quarter of 2020 include $6.8 billion of reserve builds firmwide, largely due to COVID-19.

JPMorgan Chase & Co today reported its financial results for the first quarter of 2020, with the report revealing a drop in net income due to reserve builds across the firm.

Net income for the first quarter of 2020 amounted to $2.9 billion, down 69%, predominantly driven by reserve builds across the firm. The results for the first quarter of 2020 include $6.8 billion of reserve builds firmwide, largely due to COVID-19.

Net revenue was $29.1 billion, down 3%. Net interest income was $14.5 billion, flat versus the prior-year, with the impact of lower rates offset by balance sheet growth and mix as well as higher net interest income in CIB Markets. Non-interest revenue was $14.5 billion, down 5%. This reduction in revenue included a $951 million loss in Credit Adjustments & Other in CIB predominantly driven by funding spread widening on derivatives and $896 million of markdowns on held-for-sale positions in the bridge book7, that were largely offset by higher CIB Markets non-interest revenue.

The provision for credit losses was $8.3 billion, up $6.8 billion from the prior year driven by reserve builds which reflect deterioration in the macro-economic environment as a result of the impact of COVID-19 and continued pressure on oil prices.

The Consumer reserve build was $4.4 billion, predominantly in Card, and the Wholesale reserve build was $2.4 billion across multiple sectors, with the largest impacts in the Oil & Gas, Real Estate, and Consumer & Retail industries.

Across segments, let’s note that Markets & Securities Services revenue was $7.4 billion, up 11% from the year-ago quarter. Markets revenue was $7.2 billion, up 32%. Fixed Income Markets revenue was $5.0 billion, up 34%, driven by strong client activity, particularly in Rates and Currencies & Emerging Markets.

Equity Markets revenue was $2.2 billion, up 28%, predominantly driven by higher revenue in derivatives. Securities Services revenue was $1.1 billion, up 6%, mainly driven by balance and fee growth partially offset by deposit margin compression.

Credit Adjustments & Other incurred a loss of $951 million predominantly driven by funding spread widening on derivatives.

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