JPMorgan Chase reports lower Q3 earnings and warns of “economic headwinds”

the american bank JPMorgan Chase reported a drop in third-quarter profit on Friday as it set aside funds for possible loan defaults, and highlighted the growing risk of a recession.

Earnings fell 17% to $9.7 billion on a 10% rise in revenue to $32.7 billion.

Results were hit by JPMorgan’s decision to add $808 million in reserves for potential bad loans. In the prior year period, earnings were boosted by $2.1 billion in reserve releases.

The contrast reflects the much more dovish economic outlook today compared to a year ago.

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Higher interest rates helped boost the bank’s net interest income, but JPMorgan suffered a big drop in investment banking income.

The CEO, Jamie Dimonsaid consumer spending remained strong during the period, but pointed to a host of risks facing the economy.

“We face significant headwinds: a inflation stubbornly high leading to higher global interest rates, the uncertain impacts of quantitative tightening, the war in Ukraine, which is raising all geopolitical risks, and the fragile state of oil supply and prices,” Dimon said.

While we hope for the best, we always remain vigilant and prepared for poor outcomes so that we can continue to serve customers even in the most difficult of times.”

In an interview with CNBC earlier this week, Dimon said a US recession was likely in early to mid-2023 and the stock market could drop another 20 percent.

Both earnings per share and revenue beat analysts’ expectations.

The shares rose 1.8% to $111.30 in premarket trading.