(AOF) – JPMorgan published disappointing quarterly results and temporarily suspended its share buybacks in order to strengthen its balance sheet in anticipation of an expected economic slowdown. In the second quarter ended at the end of June, the American bank achieved a net profit down 27.6% to 8.65 billion dollars, or 2.76 dollars per share. FactSet was targeting $2.89 per share. Net banking income increased by 0.8% to 30.72 billion. Wall Street was aiming for 31.81 billion.
The bank booked $1.1 billion in loan loss provisions, while last year $3 billion was released from provisions.
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The negative effects of rising interest rates
The rise in interest rates normally causes an increase in bank income through the loans granted. In Europe, according to a survey conducted by S&P among 85 banking establishments, the sector expects on average an 18% increase in its net interest income. However, this new inflationary context also has undesirable effects, in particular an increase in refinancing costs. It is also accompanied by the fear of a new recession, which would then affect all the bank’s businesses, ranging from loans to asset management, whose income is correlated to market valuations. Reassuring element: the banks of the euro zone are sufficiently solid to face a deterioration of their environment.