JP Morgan Chase sets aside funds to cover feared loan losses

theguardian.com:

JP Morgan Chase, the largest US bank, saw its net income fall 28% over the months of April to June as it boosted reserves to cover possible customer loan defaults amid concern over the economy and geopolitical tensions.

The investment bank’s profits for the second quarter came in at $8.65bn, or $2.76 per share, far less than $11.95bn, or $3.78 per share over the same period a year ago. Shares in the bank dropped 4.3% Thursday, hitting a fresh 52-week low.

Its chief executive, Jamie Dimon, expressed a note of caution over the direction of the American economy as fears grow that US central bankers will intensify efforts to tackle inflation – which hit a 40-year high of 9.1% in June – with a full point rise in interest rates later this month.

“The US economy continues to grow and both the job market and consumer spending, and their ability to spend, remain healthy,” he said.

“But geopolitical tension, high inflation, waning consumer confidence, the uncertainty about how high rates have to go and the never-before-seen quantitative tightening and their effects on global liquidity, combined with the war in Ukraine and its harmful effect on global energy and food prices are very likely to have negative consequences on the global economy sometime down the road.”

Last month, Dimon warned of the approach of an economic “hurricane”. On Thursday he said he hadn’t changed his views, but his concerns had edged closer and elements of financial dislocation had begun to show themselves.

The US federal reserve’s efforts to tame inflation could still lead to a soft or a hard landing, he said. “Rates are rising because of inflation, and in my view they’ll go up more than people think. Quantitative tightening will reduce liquidity in global