December 8, 2023

Brighton Journal

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Jamie Dimon warns of “the most dangerous times in decades” as banks announce huge profits

Jamie Dimon warns of “the most dangerous times in decades” as banks announce huge profits

JPMorgan Chase CEO Jamie Dimon is something of a Wall Street statesman, and on Friday he sounded a major alarm about the global implications of the conflict in Israel and Gaza.

“This may be the most dangerous time the world has seen in decades,” he said in a statement accompanying the bank’s quarterly earnings. He warned of “far-reaching impacts on energy and food markets, global trade and geopolitical relations.”

For Mr. Dimon, meddling in geopolitical affairs is nothing new: He frequently warns of the dangers of war in Ukraine and elsewhere. He said on Friday that it is preparing the country’s largest bank for a set of scary results, with other risks including higher inflation and higher interest rates. But in a phone call with reporters, he described the conflict in Gaza as “the highest and most important thing for the Western world.”

Otherwise, JPMorgan and other major banks appear to be operating smoothly. JPMorgan’s profits rose to $13.2 billion in the third quarter, an increase of 35 percent over the same period last year. The turmoil of the spring’s regional banking crisis, which led to JPMorgan’s acquisition of First Republic, was steadily fading, bank executives said.

“U.S. consumers and businesses generally remain healthy, even though consumers are burning through their excess cash reserves,” Dimon said.

Wells Fargo also reported earnings that beat analysts’ expectations: third-quarter earnings were $5.8 billion, up 61 percent from a year ago. But the bank’s CEO, Charles W. Scharf, warned that he was seeing some signs of tension among customers.

Noting the impact of a slowing economy, Mr. Scharf said borrowers are reducing their loan balances — a good thing for consumers, perhaps, but a tough place for banks, which make money from lending. Losses from bad debts rose “modestly,” he said.

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Citigroup’s profits rose to $3.5 billion in the third quarter, an increase of 2 percent, which is a slight increase than expected. “We are truly a bank for all seasons,” the bank’s chief executive, Jane Fraser, said in a statement, adding that each of the bank’s five core business lines recorded revenue growth compared to the previous year.

“The consumer still has a lot of flexibility,” said Mark Mason, Citi’s chief financial officer. Payment rates are trending down and spending is slowing, but only slightly, he said. In 2019, customers were still spending and paying down their card balances more consistently than they were before the pandemic.

“The United States continues to surprise us with its resilience,” he said. He added that the so-called “soft landing” of the economy was becoming increasingly likely.

Dimon said all banks are in regular contact with each other about the potential impacts of international conflicts. “We’re all climbing the wall of anxiety a little bit,” he said.