JPMorgan Chase announced a record-breaking first-quarter profit and revenue that surpassed expectations on Friday. The New York-based bank reported a profit of $12.6 billion or $4.10 per share, up 52% from $8.3 billion or $2.63 per share a year earlier. Analysts had predicted earnings of $3.41 per share, according to Refinitiv. The company also increased its net interest income guidance for 2023 to about $81 billion, up $7 billion from the previous estimate.
As the largest bank in the United States with $3.67 trillion in assets, JPMorgan Chase serves as an economic indicator for the country. CEO Jamie Dimon stated in a press release that the US economy remains on solid ground, with consumers continuing to spend and businesses in good shape. However, he warned that the potential challenges the bank has been monitoring for the past year still loom large. During the first quarter, deposits increased to $2.38 trillion from $2.34 trillion in the previous quarter, following last month’s banking meltdown which prompted a rush of customers seeking refuge in larger banks and money market funds.
Dimon reassured investors during the company’s post-earnings conference call that he isn’t concerned about a credit crunch following the banking crisis. He believes the recent turmoil has merely tightened financing conditions, increasing the odds of a recession. Dimon also advised companies to prepare for the possibility of higher interest rates for a longer period than expected, despite the Federal Reserve’s indication that it will pause rates later this year.
In response to concerns about the $20 trillion commercial real estate industry being the next sector to face challenges after the banking crisis, JPMorgan Chase revealed that its exposure to office space is limited. CFO Jeremy Barnum stated that less than 10% of their portfolio is in the office sector, focused on urban dense markets, and nearly two-thirds of their loans are for multifamily properties in supply-constrained markets. Following the announcement, shares of JPMorgan Chase rose 6.7% on Friday morning.