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JPMorgan Chase holds $400 billion in residential and commercial mortgages on its books. Against this are about $20 billion in loss reserves and $250 billion in shareholder equity. So CEO Jamie Dimon would love whatever’s ailing real estate to pass quickly. But that’s not his base case.
If the economy stays as strong as it is, “real estate will muddle through,” Dimon said on an earnings call today.
He said this while business confidence is high, interest rates aren’t going down, and there is war in Europe and the Middle East. The CEO, who warned of economic slowdowns that didn’t happen in 2022 and 2023, didn’t predict one today.
“I just think the chance of that happening is higher than other people,” he said.
In Dimon’s worst-case scenario, persistently high inflation erodes most everyone’s income while unemployment rises, unleashing widespread commercial and residential mortgage defaults.
“That will filter through the whole economy in a way people haven’t really experienced since 2010,” Dimon said.
Unemployment was 9.4% in 2010. It is 3.8% now.
JPMorgan shares were down 6% midday Friday after a disappointing quarterly earnings report. Profit clocked in at $13 billion, but the lender warned of a flattening net interest margin owing to higher costs for funding. Capital levels were robust at 15%.
“We’re earning a lot of money,” Dimon said on the call.
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Aaron Elstein , 2024-04-12 19:41:31
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