This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.nytimes.com/2020/04/14/business/bank-earnings-jpmorgan-wells-fargo.html
The article has changed 18 times. There is an RSS feed of changes available.
| Version 8 | Version 9 |
|---|---|
| Big Banks, Readying for a Recession, Set Aside Billions | Big Banks, Readying for a Recession, Set Aside Billions |
| (about 7 hours later) | |
| The economic shutdown the coronavirus has caused has already forced millions of Americans out of work and threatened the future of thousands of small businesses, and the country’s biggest banks are bracing for the fallout. | The economic shutdown the coronavirus has caused has already forced millions of Americans out of work and threatened the future of thousands of small businesses, and the country’s biggest banks are bracing for the fallout. |
| JPMorgan Chase and Wells Fargo — which on Tuesday were the first two major banks to report earnings this quarter — set aside billions of dollars each for losses on loans to customers who may soon no longer have the means to repay them. | JPMorgan Chase and Wells Fargo — which on Tuesday were the first two major banks to report earnings this quarter — set aside billions of dollars each for losses on loans to customers who may soon no longer have the means to repay them. |
| The chief executive of JPMorgan, Jamie Dimon, said the bank was preparing for “the likelihood of a fairly severe recession.” | The chief executive of JPMorgan, Jamie Dimon, said the bank was preparing for “the likelihood of a fairly severe recession.” |
| JPMorgan, the country’s largest bank, added $8.3 billion to its reserves to prepare for impending defaults — a $6.8 billion increase from the same quarter last year. Wells Fargo set aside $4 billion, which was an increase of $3.1 billion. | JPMorgan, the country’s largest bank, added $8.3 billion to its reserves to prepare for impending defaults — a $6.8 billion increase from the same quarter last year. Wells Fargo set aside $4 billion, which was an increase of $3.1 billion. |
| “The actual level of losses we incur will be driven by how long this period lasts and the level of support the government provides,” Wells Fargo’s chief executive, Charles W. Scharf, said on a call to discuss the results with Wall Street analysts. | “The actual level of losses we incur will be driven by how long this period lasts and the level of support the government provides,” Wells Fargo’s chief executive, Charles W. Scharf, said on a call to discuss the results with Wall Street analysts. |
| But the banks’ maneuvers to steel themselves for losses reflect their calculations that the $2 trillion economic relief bill, which includes direct payments to low-earning Americans as well as $349 billion in forgivable loans to small businesses, will not be enough to stave off widespread financial instability for everyday Americans and their employers. | But the banks’ maneuvers to steel themselves for losses reflect their calculations that the $2 trillion economic relief bill, which includes direct payments to low-earning Americans as well as $349 billion in forgivable loans to small businesses, will not be enough to stave off widespread financial instability for everyday Americans and their employers. |
| JPMorgan’s reserves, for example, are now close to the levels the bank felt it was necessary to hold in the immediate aftermath of the 2008 financial crisis, which brought about the Great Recession. | JPMorgan’s reserves, for example, are now close to the levels the bank felt it was necessary to hold in the immediate aftermath of the 2008 financial crisis, which brought about the Great Recession. |
| Mr. Dimon said he believed it would be a few months before the country got back to something approaching economic normalcy. | Mr. Dimon said he believed it would be a few months before the country got back to something approaching economic normalcy. |
| “A rational plan to get back to work is a good thing to do,” he said. “And hopefully it’ll be sooner rather than later, but it won’t be May. We are talking about June, July, August, something like that.” | “A rational plan to get back to work is a good thing to do,” he said. “And hopefully it’ll be sooner rather than later, but it won’t be May. We are talking about June, July, August, something like that.” |
| The banks’ preparations for the hard times ahead hit their profits hard in the last quarter. | The banks’ preparations for the hard times ahead hit their profits hard in the last quarter. |
| JPMorgan’s net income fell to $2.9 billion from $8.5 billion for the last quarter of 2019 and $9.2 billion for the same period a year earlier — with the bank’s new reserves essentially the difference. Wells Fargo reported a steep drop in profit to $653 million from $5.9 billion during the same period in 2019. | JPMorgan’s net income fell to $2.9 billion from $8.5 billion for the last quarter of 2019 and $9.2 billion for the same period a year earlier — with the bank’s new reserves essentially the difference. Wells Fargo reported a steep drop in profit to $653 million from $5.9 billion during the same period in 2019. |
| JPMorgan expected consumer loans — most of them credit cards — to lose $4.4 billion while commercial loans to businesses in real estate, retail and oil and gas could lose $2.4 billion, according to its estimates. And Wells Fargo said $1 billion of its potential losses could come from loans to consumers and small businesses. | JPMorgan expected consumer loans — most of them credit cards — to lose $4.4 billion while commercial loans to businesses in real estate, retail and oil and gas could lose $2.4 billion, according to its estimates. And Wells Fargo said $1 billion of its potential losses could come from loans to consumers and small businesses. |
| The reserve-building activities spooked investors in both banks. Despite overall increases in the values of the major stock indexes on Tuesday, Wells Fargo shares were down by almost 4 percent and JPMorgan by 2.7 percent at the end of trading. | The reserve-building activities spooked investors in both banks. Despite overall increases in the values of the major stock indexes on Tuesday, Wells Fargo shares were down by almost 4 percent and JPMorgan by 2.7 percent at the end of trading. |
| But there were some bright spots, particularly at JPMorgan. | But there were some bright spots, particularly at JPMorgan. |
| The bank reported that revenue from trading things like foreign currencies, bonds and government debt rose 34 percent from a year earlier. Stock-trading revenue was 28 percent higher. Over all, revenue in the bank’s Wall Street markets division reached $7.4 billion, a record. | The bank reported that revenue from trading things like foreign currencies, bonds and government debt rose 34 percent from a year earlier. Stock-trading revenue was 28 percent higher. Over all, revenue in the bank’s Wall Street markets division reached $7.4 billion, a record. |
| And there is Mr. Dimon’s health. Mr. Dimon underwent emergency heart surgery in March, but returned to work on April 2. He said the operation had not changed his outlook for his future; he said he felt good and under no pressure to retire. | And there is Mr. Dimon’s health. Mr. Dimon underwent emergency heart surgery in March, but returned to work on April 2. He said the operation had not changed his outlook for his future; he said he felt good and under no pressure to retire. |
| “I’ve always liked working,” he said. “I think people having a purpose in life is a good thing.” | “I’ve always liked working,” he said. “I think people having a purpose in life is a good thing.” |
| Both banks reported their corporate clients were pulling cash from the lines of credits they maintain to deal with the economic effects of the outbreak. | Both banks reported their corporate clients were pulling cash from the lines of credits they maintain to deal with the economic effects of the outbreak. |
| Updated June 12, 2020 | |
| So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. | So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. |
| Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. | Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. |
| A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. | A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. |
| The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. | The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. |
| Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission. | Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission. |
| Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home. | |
| States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. | States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. |
| Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. | Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. |
| If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) | If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) |
| Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications. | Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications. |
| The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing. | The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing. |
| If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. | If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. |
| If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. | If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. |
| JPMorgan’s chief financial officer, Jennifer Piepszak, said on a call with reporters that corporate customers had taken cash out of their revolving credit lines at an unusually high rate. Mr. Dimon added that the rate was twice what it had been during the 2008 financial crisis. | JPMorgan’s chief financial officer, Jennifer Piepszak, said on a call with reporters that corporate customers had taken cash out of their revolving credit lines at an unusually high rate. Mr. Dimon added that the rate was twice what it had been during the 2008 financial crisis. |
| “People got scared,” he said. | “People got scared,” he said. |
| The bank also helped companies with good credit ratings raise more money through bond issues, Mr. Dimon said, adding that companies were piling up cash reserves to prepare for a long and slow journey out of the economic shutdown. | The bank also helped companies with good credit ratings raise more money through bond issues, Mr. Dimon said, adding that companies were piling up cash reserves to prepare for a long and slow journey out of the economic shutdown. |
| Both banks are participating in the government’s $349 billion small-business loan program. JPMorgan said it had distributed $9.3 billion so far to businesses employing a combined 700,000 people. And at Wells Fargo, the Federal Reserve temporarily lifted a growth restriction it had imposed on the bank over its fake-account scandal to allow it to make loans to its small-business customers. | Both banks are participating in the government’s $349 billion small-business loan program. JPMorgan said it had distributed $9.3 billion so far to businesses employing a combined 700,000 people. And at Wells Fargo, the Federal Reserve temporarily lifted a growth restriction it had imposed on the bank over its fake-account scandal to allow it to make loans to its small-business customers. |
| But the banks’ preparations for personal and business customers who fall short of their obligations were a profound sign of the economic damage that the coronavirus had already done, even with the government interventions made so far. Both banks said they had started factoring the stimulus package into their economic forecasts as soon as it became law. | But the banks’ preparations for personal and business customers who fall short of their obligations were a profound sign of the economic damage that the coronavirus had already done, even with the government interventions made so far. Both banks said they had started factoring the stimulus package into their economic forecasts as soon as it became law. |
| Wells Fargo made its loss estimates in part by looking at the bank’s performance during the 2008 crisis, said John Shrewsberry, the bank’s chief financial officer. And, he said, the bank always set aside more than it ends up charging off. | Wells Fargo made its loss estimates in part by looking at the bank’s performance during the 2008 crisis, said John Shrewsberry, the bank’s chief financial officer. And, he said, the bank always set aside more than it ends up charging off. |
| But, he said, the bank could set aside more soon, depending on how much worse conditions for everyday Americans become. | But, he said, the bank could set aside more soon, depending on how much worse conditions for everyday Americans become. |
| “If things play out substantially worse, it’s certainly possible that we end up building more reserves,” Mr. Shrewsberry said. | “If things play out substantially worse, it’s certainly possible that we end up building more reserves,” Mr. Shrewsberry said. |