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Amid Rising Concerns Of Recession, JP Morgan Signals Caution On Credit

Amid Rising Concerns Of Recession, JP Morgan Signals Caution On Credit
While not expecting to see any improvement or turnaround of the credit cycle thus year, US banker JPMorgan Chase said that it is undertaking measures to ensure that it is ready to take advantage when there is an actual reversing of the credit cycle.
According to a presentation Tuesday at the annual investor day of the largest U.S. bank, it informed its stakeholders that they should be anticipating a slowdown of the lending business and its book as the company is trying to show a “focus on high quality loans.” The profitability target of 17 per cent return on tangible equity, the same number as it had attained last year has been set by the bank for its profitability.
"Recent declines in business sentiment have driven recessionary indicators higher," said JPMorgan Chase CFO Marianne Lake.
As in the current short term period, the bank is anticipating that the rates of losses to remain low – near the levels reached in 2018, which was described last month as “pristine” by the Chief Executive Officer of the bank Jamie Dimon.
“We do believe there’s more room to run this cycle and we are optimistic global growth will stabilize,” Chief Financial Officer Marianne Lake said. Still, “recent declines in business sentiment have driven recessionary indicators higher. They are not flashing red, but they are off the floor."
The not so friendly trading environment that had engulfed the entire of the fourth quarter last year was extended into the new year, the company also said. The bank’s co-President Daniel Pinto said that in the first quarter of the current year, the decline in percentage in trading revenue is likely to be recorded in the high teens in comparison to the $6.6 billion of revenue that was generated during the first quarter of last year.
He said that the drop was driven by fall in the currencies and the business in the emerging markets units. In 20919, JP Morgan anticipates that there would be an increase in its net interest income which is expected to increase by an additional $2.5 billion because the bank would get some benefits because of the higher rates. While raising its benchmark rate four times last year, the Federal Reserve has of recent times given signals that the speed of increase of interest rates would be slowed down during the current year.
In 2019, there is a possibility of an increase of the overall expenses by more than $2 billion to touch around $66 billion because of its program of expansion into new states for the first time in more than a decade as well as because of expenses towards construction of a new headquarters in New York, JP Morgan has said.

Christopher J. Mitchell

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