The Toronto company also said it set aside 232 million this year for U.S. regulatory probes into the bank’s metals-trading practices and costs tied to the wind-down of that business.
The second-quarter jump in provisions may be three to four times higher than a year earlier and will be mostly for loans that have yet to go bad, analysts said.
The Pittsburgh company’s sale of its stake in the asset manager yielded billions of dollars that could cushion the pandemic’s economic blow and eventually help fund a big acquisition.
Lenders are throwing money at buyers with stable jobs while making it harder for weak borrowers to get loans; $50 billion in loss provisions may not be enough and could stifle lending.
The millions of dollars earned from Paycheck Protection Program transactions will help cover rising provision costs tied to the new CECL accounting standard and coronavirus shocks to loan books.
Though hopeful for a second-half bounceback in the economy, JPMorgan Chase is prepared for 20% unemployment, lackluster GDP and losses in its loan portfolio that could reach tens of billions of dollars.
An uptick in closings is likely, but how many institutions go under and how fast will depend on a variety of factors, including the duration of the pandemic.
