JP Morgan said today that its profit for the first quarter was 68 per cent down on a year previously after it set aside $6.8bn (£5.4bn) in coronavirus-related credit provisions.
The bank reported net earnings of $2.9bn, down from $9.2bn for the same period last year.
JP Morgan said reported revenue for the quarter was $28.3bn, compared to $29.1bn in the first quarter of 2019.
JP Morgan said credit costs for the quarter were $8.3bn, including $6.8bn set aside to protect it from an expected wave of loan defaults.
The bank said the increased reserves “reflect deterioration in the macro-economic environment as a result of the impact of covid-19 and continued pressure on oil prices.”
JP Morgan said its consumer reserve build was $4.4bn, predominantly relating to cards.
In its wholesale business it put aside $2.4bn, to cover potential losses across sector such as oil and gas, real estate and the consumer and retail sector.
Chief executive Jamie Dimon said: “The first quarter delivered some unprecedented challenges and required us to focus on what we as a bank could do – outside of our ordinary course of business – to remain strong, resilient and well-positioned to support all of our stakeholders.”
Neil Wilson, chief market analyst at Markets.com, said: “The bank is preparing for a severe recession and needs to set aside capital to cover expected losses – problem is no one has a clue how big these might be.
“I should stress that even the cleverest banks won’t know just what the damage will be in a situation where the economy is stopped and then restarted.”
The pandemic has shut down businesses, put nearly 10m people out of work in the US alone and is expected to cause a global recession not seen in generations.
There have so far been more than 1.8m reported cases of covid-19, the deadly respiratory disease stemming from the virus, and 115,242 deaths worldwide.