JPMorgan signals rough first quarter as trading flags, energy woes deepen

Tue Feb 23, 2016 5:38pm EST
 
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By David Henry and Dan Freed

NEW YORK (Reuters) - JPMorgan Chase & Co (JPM.N: Quote) signalled a rough first quarter on Tuesday with double-digit declines in investment banking revenues and a $500 million increase in provisions for expected losses on energy loans.

Plummeting oil prices, volatile markets, stubbornly low interest rates, pressure from regulators and a slowdown in China have combined to hurt banks worldwide over the past few months.

Against such a backdrop, companies are either shying away from or unable to issue debt and equity and investors are reluctant to take on more risk, said Daniel Pinto, JPMorgan's head of investment banking.

"There is no doubt that so far it has been a very tough quarter," Pinto said during a presentation at the bank's investor day in New York.

JPMorgan's investment banking fee revenues were down 25 percent so far this quarter compared with a year ago and its trading revenues were 20 percent lower, although Pinto said some of the decline in trading was due to a strong year-ago performance when JPMorgan profited from Switzerland's decision to remove its currency cap.

The biggest U.S. bank by assets also gave itself another year to meet one of its most important profit goals, as hopes for higher interest rates fade, hampering the bank's ability to make profits on its loans.

JPMorgan's shares closed down 4.18 percent, helping to drag down the S&P financials index .SPSY 1.8 percent.

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A sign outside the headquarters of JP Morgan Chase & Co in New York, September 19, 2013. REUTERS/Mike Segar