JPMorgan Chase reports lower profits, gives cautious economic outlook

NEW YORK, United States - JPMorgan Chase reported a drop in second-quarter profits and warned that a weakening global economic outlook prompted the firm to set aside additional funds to cover potential bad loans.

Executives sketched out a complex economic picture, with US households still relatively well off in terms of savings, a strong job market and robust consumer spending.

But headwinds -- including high inflation, geopolitical uncertainty and fast-changing Federal Reserve policy to sharply curtail liquidity and raise interest rates -- "are very likely to have negative consequences on the global economy sometime down the road," said Chief Executive Jamie Dimon in a statement.

While consumers are "in very good shape," there are "a serious set of issues" that threaten the outlook, Dimon told reporters on a conference call.

These include the worry that Russia will cut off Germany's natural gas supply and the possibility the Federal Reserve's aggressive plan may not be sufficient to rein in inflation.

"The markets will be volatile," Dimon predicted. "You can't have all these kind of things going on and not have volatile markets."

Global equities have been under pressure throughout 2022 as economists increasingly highlight rising recession risks, although some believe any downturn would be relatively mild.

The big US bank posted earnings of $8.6 billion for the second quarter, down 28 percent from the same three months of last year, in results that missed analyst expectations.

Revenues were $30.7 billion, up one percent.

The bank said it added $428 million in credit reserves due to a "modest deterioration in the economic outlook." In the year-ago period, JPMorgan's profits were boosted by a $3 billion release in reserves.

Dimon said even in the case of a recession, JPMorgan would need to hold "a lot less" in reserves compared with the $15 billion it set aside early in Covid-19. 

The bank experienced $657 million in charge-offs for bad loans in the second quarter, up only modestly from the level in the previous quarter.

JPMorgan enjoyed a boost from higher net interest income following Fed interest rate increases. But the bank also incurred higher expenses on salaries, technology and marketing.

The bank temporarily suspended share buybacks to meet new federal stress test requirements for managing risk assets, Dimon said.

Consumers still spending 

The results came as the Labor Department this week reported another large spike in wholesale and consumer prices, which are the heart of investor fears about the consumer-driven US economy.

But JPMorgan Chief Financial Officer Jeremy Barnum said "there's essentially no evidence" at this point of a drop-off in consumption.

The bank's credit card data confirms that consumers are spending more on food and gasoline, but that they are still also spending on travel and dining.

"That indicates to us that consumers still don't feel so pinched by inflation that they're cutting back on discretionary spending, and that's a relatively positive sign," Barnum said.

Persistently high inflation has also raised fears that the Fed will adopt an even tougher line on monetary policy after the central bank announced a 0.75-percentage-point hike, its biggest since 1994.

The latest inflation readings have prompted talk of a potential for full point rate increase at the policy meeting later this month -- one that Fed Governor Christopher Waller said Thursday he could support if coming data show no signs of a slowdown.

Dimon said there is evidence of the hit from the Fed shift, but the impacts could worsen if the US central bank is unable to slow the economy with a "soft landing," Dimon said.

JPMorgan shares finished down 3.5 percent to $108.00.

The suspension of share buybacks is "spooking" investors, said Briefing.com, calling it "a signal that management feels the need to be cautious with its money."

Agence France-Presse

JPMorgan Chase asks some managers to return to the office

NEW YORK - JPMorgan Chase, the largest US bank, has asked the heads of its sales and trading units to return to the office by September 21, a person familiar with the plans said Thursday.

The announcement was made during a telephone conference call with the team leaders of those units, many of whom have already returned to the bank's downtown offices, the source told AFP.

JPMorgan Chase CEO Jamie Dimon has spent most of the summer in the New York City office.

The bank's request however is addressed to the heads of these divisions, not to all employees.

JPMorgan plans to be flexible with people who have to manage childcare problems, as many area schools have moved partially or entirely to online courses.

They also will be flexible with employees who are at high risk of exposure to the novel coronavirus, or live with someone at high risk.

JPMorgan plans to monitor the pandemic in each city and location where it operates and adjust to changing circumstances.

The bank believes that having these employees in the office strengthens culture, creates a more cohesive work environment and is important for training newcomers.

Contacted by AFP, JPMorgan Chase declined to comment on the changes, first reported by the Wall Street Journal.

The activities of JPMorgan, as well as all of Wall Street's major financial institutions, were seriously disrupted earlier in the year when the Covid-19 pandemic began to spread, especially affecting New York City.

Many employees opted for teleworking while others have been relocated to emergency sites.

This did not prevent the Wall Street giant from posting record profits in the second quarter of 2020 thanks especially to brokerage and investment banking activities.

Agence France-Presse

JPMorgan Chase chief: banks healthy 10 years after meltdown

WASHINGTON -- JPMorgan Chase CEO Jamie Dimon said Sunday the US banking system had returned to full health 10 years after the collapse of Lehman Brothers plunged the world into the worst financial crisis since the Great Depression.

Dimon, who traded barbs earlier in the week with Donald Trump, gave the US president "pretty good" marks for his handling of the US economy, noting that business and consumer confidence "skyrocketed" after his election.

"The banking system is very, very, very healthy. And regulators should actually take a little bit of a victory lap because Lehman would not happen today," he said on ABC's "This Week."

"There will be a recession one day, but it won't be the banking system. It'll probably be something else," he said.

Lehman Brothers, a venerable Wall Street investment bank, filed for bankruptcy September 15, 2008 amid a subprime mortgage crisis, setting off a broader market crash that imperiled the global financial system.

Dimon defended the federal bailouts of the big US banks at the height of the crisis.

But he said he understood why many believe it was unfair that the banks were protected while other Americans were left to suffer the consequences.

"And there's some truth to that. And they didn't see Old Testament justice. So I understand why there is a lot of anger out there," he said.

source: news.abs-cbn.com

Trump creates business advisory council stacked with CEOs

WASHINGTON - President-elect Donald Trump announced the formation of a council to advise him on job creation, a group comprised of the leaders of a variety of major US corporations including GE, GM, Boeing, Disney and IBM.

Stephen Schwarzman, chief executive officer of major investment firm Blackstone Group LP, will chair the council.

"My administration is committed to drawing on private sector expertise and cutting the government red tape that is holding back our businesses from hiring, innovating, and expanding right here in America," Trump said in a statement announcing the formation of the council.

Trump called Schwarzman earlier this week to ask for his help in chairing the council, according to a source familiar with the discussions who was not authorized to speak publicly on the arrangements. The two men, who are not friends and have not done business together before, drafted a list of CEOs to ask to participate in the forum, and then Schwarzman asked each individual to participate.

The forum could meet as frequently as monthly, the source said.

Trump has said that his top priorities will include cutting regulations that affect business and lowering the corporate tax rate, positions business leaders have cheered.

Presidents often convene councils of business leaders. President Barack Obama frequently met with the CEOs of large companies and often spoke before the Business Roundtable, comprised of CEOs of big corporations.

In 2011, Obama convened a jobs council that was led by General Electric Co CEO Jeff Immelt and an export council headed by Xerox Corp CEO Ursula Burns.

Obama and business leaders worked on trade, technology and immigration efforts.

Some members of Trump's council also served in advisory roles with Obama, including Bob Iger, the CEO of Walt Disney Co ; Jim McNerney, former CEO of Boeing Co ; and Ginni Rometty, CEO of International Business Machines Corp . All three served on Obama's export council and will continuing advising the next administration.

Noticeably absent from the council are heads of leading U.S. technology companies such as Google's parent Alphabet Inc , Apple Inc and Facebook Inc. Trump's transition team has been slow to establish a group to address cyber security and other technology issues.

The council could still add leaders from technology companies, a source familiar with the formation of the group said.

The members of Trump's council include:

* Stephen A. Schwarzman (Forum Chairman), chairman, CEO, and co-founder of Blackstone;

* Paul Atkins, CEO, Patomak Global Partners, LLC, former commissioner of the Securities and Exchange Commission

* Mary Barra, chairman and CEO, General Motors Co

* Toby Cosgrove, CEO, Cleveland Clinic

* Jamie Dimon, chairman and CEO, JPMorgan Chase & Co

* Larry Fink, chairman and CEO, BlackRock Inc

* Bob Iger, chairman and CEO, The Walt Disney Co

* Rich Lesser, president and CEO, Boston Consulting Group

* Doug McMillon, president and CEO, Wal-Mart Stores Inc

* Jim McNerney, former chairman, president, and CEO, Boeing

* Adebayo "Bayo" Ogunlesi, chairman and managing partner, Global Infrastructure Partners

* Ginni Rometty, chairman, president, and CEO, IBM

* Kevin Warsh, Shepard Family distinguished visiting fellow in economics, Hoover Institute, former member of the Board of Governors of the Federal Reserve System

* Mark Weinberger, global chairman and CEO, EY

* Jack Welch, former chairman and CEO, General Electric

* Daniel Yergin, Pulitzer Prize winner, vice chairman of IHS Markit Ltd

- With additional reporting by Gui Qing Koh and Gregory Roumeliotis

source: news.abs-cbn.com

Scandals cost JPMorgan $1 billion in fines

It’s $1 billion in payouts that JPMorgan Chase & Co most likely wants to forget.

In agreements with regulators totaling $1 billion and made public on Thursday, the nation’s biggest bank settled four civil investigations into its "London Whale" trading scandal and two more into the wrongful billing of credit-card customers.

The deals, which involve five authorities from the United States and one from the UK, are a milestone in the company's push to clean up its legal affairs but leave JPMorgan exposed to additional costs and embarrassment.

The bank still faces criminal probes into the trading scandal, its conduct during an energy trading investigation, sales of mortgage securities in the United States and possible bribery in China. Investigators are also looking into its role in setting benchmark interest rates known as LIBOR.

The settlements include $920 million of penalties for JPMorgan's London Whale trading scandal, which Chief Executive Jamie Dimon at first dismissed as a "tempest in a teapot” and ultimately resulted in $6.2 billion in losses. The deals included an admission of wrongdoing, which has been rare in past settlements made by the U.S. Securities and Exchange Commission. (Full Story)

A second set of settlements includes $80 million of payments for billing of credit-card customers for indentity-theft protection services that they did not receive. The deals, made with the U.S. Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau, come after the company issued $309 million of refunds to customers. (Full Story)

The Comptroller of the Currency also on Thursday ordered JPMorgan to improve its consumer debt-collection practices. That order did not include financial penalties and involved allegations made public more than two years ago.

The London Whale deals, reached with the UK's Financial Conduct Authority and the U.S. Federal Reserve, SEC and Comptroller of the Currency, resolve the biggest civil probes into the trading debacle. The deals include citations against JPMorgan for poor risk controls and failure to inform regulators about deficiencies in risk management identified by bank management.

The scandal took on the London Whale nickname that hedge funds had given to Bruno Iksil, a trader at JPMorgan's Chief Investment Office in London, for the enormous size of the positions he took for the company.

ADMITTING THE FACTS

By coordinating the announcements, the regulators delivered a round $1 billion punishment in a single day. Regulators have been criticized by lawmakers and the public for not bringing more cases or sending Wall Street executives to jail for financial crisis-era misdeeds.

The deal follows a decision by the SEC to allow fewer firms to settle without admitting or denying the facts of cases. In August, the SEC reached a settlement with hedge fund manager Philip Falcone, its first big case to include an admission of wrongdoing. (Full Story)

But George Canellos, co-director of the SEC’s enforcement division, cautioned in a statement that officials will not demand admissions in all future settlements.

Dimon and other JPMorgan executives had already admitted mistakes in the Whale debacle. Starting the day Dimon disclosed in May 2012 that the Whale trades were losing billions of dollars, he has apologized for the "tempest in a teapot" remark. He also testified before Congress that bank was "stupid" in handling the trades at its Chief Investment Office.

The enforcement actions left some people dissatisfied because they did not blame any individuals specifically for wrongdoing.

Senator Carl Levin, a Michigan Democrat and chairman of the Senate Permanent Subcommittee on Investigations, issued a statement pointing out that his panel had found that "senior bank executives made a series of inaccurate statements." He said there is still time for other civil and criminal investigations to hold people accountable.

David Weinstein, a former federal prosecutor who is now a partner at Clarke Silverglate in Miami, said, "Somebody else has to answer for this conduct rather than just paying money.”

Dimon has said that JPMorgan executives did not intend to mislead anyone about the Whale losses, which the bank concluded were initially understated by its traders. Two traders have been indicted on conspiracy and fraud charges and Iksil has agreed to cooperate with prosecutors.

Dimon, in a statement issued by the company on Thursday, said, "We have accepted responsibility and acknowledged our mistakes from the start, and we have learned from them and worked to fix them."

In April, Dimon told shareholders that fixing risk controls had become bank's top priority and that some projects aimed at building the company's business had been put aside.

JPMorgan called the Whale settlements "a major step in the firm’s ongoing efforts to put these issues behind it."

But the deals leave unresolved other issues that have helped drive the bank's legal costs to $5 billion a year.

The company continues to face a criminal probe by U.S. prosecutors into the London Whale scandal, despite Dimon's public insistence that no bank executives intentionally misled investors.

Even as JPMorgan was hailing the settlements, it said it had received a legal notice that the staff of another regulator, the U.S. Commodity Futures Trading Commission, intends to recommend an enforcement action against the bank for its derivatives trading in the London Whale debacle. (Full Story)

The state of Massachusetts is also investigating, the bank said. And, despite the Comptroller of the Currency's order on debt collections, a group of 13 states is investigating those practices.

"You are seeing the regulators ratchet up the heat on the banks," said analyst Charles Peabody of Portales Partners. "If you are too big to manage, they are going to make you pay."

The bank has been under intense scrutiny from the U.S. government since May 2012, when Dimon disclosed the mounting loss.

Thursday's civil penalties follow orders in January from the Office of the Comptroller of the Currency and the Federal Reserve directing JPMorgan to improve its risk control systems and step up its anti-money launder safeguards.

The total penalties, which are among the highest ever paid by a bank, are well short of the $1.92 billion that London-based HSBC agreed to pay last year to settle money laundering charges.

Fines are determined by laws governing the amount each agency can impose for each violation of a rule, and then are fine-tuned through negotiations between the regulators and the bank.

source: www.abs-cbnnews.com

US won't prosecute ex-JPMorgan trader Iksil: source

NEW YORK CITY - The ex-JPMorgan Chase trader nicknamed "the London Whale" for his huge derivatives losses has reached a deal to avoid US prosecution, a source familiar with the situation said Tuesday.

Bruno Iksil, who along with others has been blamed for big bets that resulted in a $6.2 billion loss for the bank in 2012, reached the deal after agreeing to testify in the case, according to the source.

But criminal indictments against two other ex-JPMorgan traders could come later this week in the case, with regulators focused on whether some in the bank sought to cover up the extent of the losses.

Iksil, a French citizen, cooperated with prosectors who determined after reviewing email correspondence and other evidence not to prosecute him, the source told AFP.

Iksil also is not expected to be named in civil charges by the Securities and Exchange Commission and Commodities Futures Trading Commission, the source said.

JPMorgan chief executive Jamie Dimon and other company brass have apologized for the London whale debacle, depicting it as a major blunder that resulted from poor strategy and execution.

But US prosecutors have been probing whether some London officials within JPMorgan understated the losses as they were mounting, misleading senior company officials in New York.

Two other former JPMorgan employees, Julien Grout, who worked under Iksil reporting on the trades, and Javier Martin-Artajo, who was the head of the trading team, have been named in recent days in the US press as facing likely criminal indictment as soon as this week.

All three men worked together at JPMorgan in London.

Indictments against Grout and Martin-Artajo could come as soon as Wednesday, with the timing partly depending on whether they are now in countries where extradition is possible, the Wall Street Journal reported.

Grout, also a French citizen now residing in his home country, has not received a warrant for his arrest, his attorney Edward Little told AFP.

Grout has "no need to collaborate" with US authorities on the probe, Little said. "He's done nothing wrong."

Martin-Artajo, a native of Spain residing in London, is now on a "long planned vacation," his law firm Norton Rose Fulbright said on his behalf.

Martin-Artajo has cooperated with UK regulatory inquiries and has received no communication from "any government regulators" that indicate "he should not be on vacation at this time," said a statement released by the firm.

"Mr. Martin-Artajo is confident that when a complete and fair reconstruction of these complex events is completed, he will be cleared of any wrongdoing," the statement said.

JPMorgan fired Iksil and Martin-Artajo in the aftermath of the whale, while Ina Drew, who led the chief investment office where the ill-conceived trades were launched, also stepped down.

JPMorgan slashed Dimon's 2012 compensation package by 50 percent and overhauled its risk management practices. Still, Dimon had to beat back a shareholder challenge this spring that sought to strip him of his chairmanship at the bank, the nation's largest by revenue.

The SEC has launched a civil probe of the bank's actions, including its disclosures to investors and the bank's internal controls.

The two sides are in talks for a possible settlement this fall, according to reports. The agency is pressing for an admission of wrongdoing in the case, part of new SEC Chairman Mary Jo White's efforts to toughen oversight of misconduct, the reports said.

source: www.abs-cbnnews.com

JPMorgan Chase names Lake next CFO

JPMorgan Chase said Marianne Lake, 43, would be its next chief financial officer, making her one of the most powerful women in the U.S. banking industry.

Lake is the current CFO of the bank's consumer and community banking business. She is expected to replace Douglas Braunstein as the bank's CFO as Braunstein transitions to vice chairman of the bank early next year.

Lakes is to report to Chief Executive Officer James Dimon. Braunstein had been working under co-Chief Operating Officer Matt Zames, The Wall Street Journal reported Monday.

Dimon said lake is "an outstanding choice for this critically important role."

Lake has "developed an impressive breadth of knowledge and experience in finance across both our wholesale and our consumer businesses -- in the United States and around the world," he said.

By taking the position, Lake joins the inner circle of 14 executives who run JPMorgan Chase, which is currently the largest bank in the country.

There is only one other woman in the so-called operating committee at the present time, Mary Erdoes, the head of JPMorgan's asset management.

By comparison, four of 10 of executives reporting to the CEO at Bank of America are women, while no women are in the tier at Citigroup and only one is on the 11-executive team that runs Morgan Stanley, the Journal said.

Dimon said Monday hiring a woman as CFO was incidental. While "very conscious" that hiring women is important, gender "wasn't a consideration at all -- we were simply looking for the best person for the job," he said in an interview.

source: upi.com

JPMorgan faces money laundering probe -source

JPMorgan Chase & Co's compliance with U.S. anti-money laundering laws is being reviewed by a banking regulator, a source said, making the largest U.S. bank the latest target of a wide investigation of how banks prevent transactions involving drug money and sanctioned countries.

The Office of the Comptroller of the Currency, an independent branch within the Treasury Department, is examining JPMorgan's systems that are designed to monitor and filter such transactions, said the source, who is familiar with the situation.

The exact scope of the inquiry and the size of potential liabilities for the bank could not be learned.

JPMorgan spokesman Joseph Evangelisti declined to comment on Saturday.

In its quarterly filing with the U.S. Securities and Exchange Commission last month, JPMorgan said it expected heightened scrutiny by regulators of its compliance with new and existing regulations, including anti-money laundering laws.

The latest investigation comes in the midst of stepped-up efforts by regulators to crack down on money laundering, including transfers of drug money through bank networks and funds from countries facing international sanctions such as Iran.

The problem also has become a focus area for the Department of Justice, which wants to ramp up the number of criminal cases it brings under the Bank Secrecy Act, a law that requires financial institutions and their employees to take steps to prevent money laundering.

U.S. regulators also are potentially examining illicit transactions tied to Venezuela, the source said.

Earlier this summer, British bank HSBC Holdings Plc set aside $700 million to cover investigations that could result in one of the biggest ever settlements or fines. A U.S. Senate report criticized a "pervasively polluted" culture at the bank. The Senate panel examined transactions tied to Mexico, Iran, the Cayman Islands and Saudi Arabia.

Last month, New York's banking regulator reached a $340 million settlement with British bank Standard Chartered Plc after the regulator investigated transactions tied to Iran.

There have also been smaller cases in which the comptroller's office targeted weaknesses in how banks clear checks potentially tied to shadowy money transactions through a process called remote-deposit capture.

In April, the OCC identified a number of anti-money laundering deficiencies at Citigroup Inc. The inquiry investigated a monitoring gap at the bank tied to Citigroup's remote deposit capture business.

At the time, Citigroup said it had fixed the deficiencies or was in the process of doing so.

The New York Times earlier reported the news of the JPMorgan investigation.

source: abs-cbnnews.com

JPMorgan chief admits bank's 'credibility' at stake

WASHINGTON -- JPMorgan Chase CEO Jamie Dimon admitted on Sunday that a $2 billion loss on derivatives trades had jeopardized the bank's credibility and given regulators a fresh opportunity to target Wall Street.

Dimon told NBC's "Meet the Press" program that the big loss incurred by the New York-based bank, which triggered a slide in banking shares on Friday, was damaging, but not bad enough to stop the company making a profit.

The Wall Street boss has led US banks in fighting the application of the new Volcker Rule, named after former Federal Reserve chairman Paul Volcker, which would ban so-called proprietary trading, when banks trade on their own accounts. Banks are also resisting proposed curbs on their hedging activities.

Asked if JPMorgan's losses had given regulators new ammunition to clamp down on Wall Street after the US government bail out of several financial institutions during the 2008 crisis, Dimon replied: "Yes, absolutely. This is a very unfortunate and inopportune time to have had this kind of mistake."

He denied that the unexpected losses from a hedging scheme -- designed to lower investment risk, but which spectacularly backfired -- had placed the company in jeopardy, though unwanted ramifications could follow.

"It's a question of size. This is not a risk that is life-threatening to JPMorgan," said Dimon, who late Thursday told analysts that the loss could increase to $3 billion through the end of June due to market volatility.

"This is a stupid thing that we should never have done, but we're still going to earn a lot of money this quarter. So, it isn't like the company is jeopardized.

"We hurt ourselves and our credibility yes, and we've got to fully expect and pay the price for that."

The interview with Dimon was conducted Friday after JPMorgan shares closed down 9.3 percent, wiping $14 billion off the market value of the bank.

The shock loss came over the past six weeks in the New York bank's risk management unit, the Chief Investment Office, and involved trading in credit default swaps, a so-called "synthetic hedge."

The losses were a humiliation for Dimon -- one of Wall Street's best known titans -- and for the bank, after it proudly came through the financial crisis in far better shape than many of its rivals.

Politicians who have called for the tightening of bank regulation and tougher controls on proprietary trading -- when banks' trade on their own accounts -- have seized on JPMorgan's losses.

On Sunday, Barney Frank, a Republican congressman and former chair of the House Financial Services Committee who drew up the Dodd-Frank financial reform bill after the 2008 crisis, said banks were not being unfairly targeted.

He said "we have stopped... them from losing money in ways that would cause damage to the rest of the system," while accusing Republicans of trying to reduce funding for the government agency that monitors derivatives trading.

Dodd-Frank was signed into law by President Barack Obama in 2010 with the intention of preventing high risk activities on Wall Street, which four years ago culminated in a global recession, from impacting the wider economy again.

Although the reforms imposed new regulations for banks, hedge funds and private equity activities, some lawmakers have said the rules do not go far enough.

Frank said the Volcker rule on proprietary trades, which Wall Street leaders and some lawmakers have argued would amount to an unnecessary block on its freedom to conduct business, "is still being formulated."

"It's a complicated thing," Frank added.

article source: interaksyon.com

JPMorgan Chase (JPM)- Earnings Report on July 14th, 2010 – Video