JPMorgan’s profit fell 17% as sluggish business deals and loan loss reserves weighed on it

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Oct 14 (Reuters) – JPMorgan Chase & Co (JPM.N) on Friday reported a 17% fall in third-quarter profit as a deteriorating economic outlook slowed business and prompted America’s largest bank to build up reserves to cover potential defaults .

Results from the US’s largest bank are being closely monitored to gauge the real impact on American businesses of the Federal Reserve’s aggressive rate hikes to curb inflation.

“In the US, consumers continue to spend on solid balance sheets, job openings are plentiful and businesses remain healthy,” Chief Executive Officer Jamie Dimon said in a statement.

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However, Dimon cautioned that rising interest rates, inflation and geopolitical turmoil pose significant headwinds.

Typically, rising interest rates are good for banks because they can charge consumers more to borrow, but the broader risk of an economic slowdown, higher borrowing costs and the war in Ukraine could cloud the economic outlook and hurt future profits.

JPMorgan’s earnings for the quarter ended September 30 were $9.74 billion, or $3.12 per share, compared to $11.69 billion, or $3.74 per share last year.

Analysts had expected $2.88 per share. It wasn’t immediately clear whether the reported numbers were comparable to estimates.

The bank has allocated $808 million in reserves as the Fed’s rate hikes stoke fears of an economic slowdown.

For comparison, in the same quarter last year, the bank released $2.1 billion in reserves it had been holding against potential COVID losses.

Revenue from investment banking, one of the bank’s largest businesses, plunged 43% to $1.7 billion as a mix of high inflation and fears of a looming recession forced buyers and sellers to halt deals.

The lack of activity has led to a slump in bank fees from underwriting and advising on M&A and IPOs, in contrast to a record run last year.

The bank reported revenue of $32.72 billion for the quarter, up from $29.65 billion a year earlier.

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Reporting by Niket Nishant and Noor Zainab Hussain in Bengaluru and Lananh Nguyen in New York; Adaptation by Saumyadeb Chakrabarty

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