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Jamie Dimon Sounds Alarm on Potential Risks as Banks Post Record Earnings

JPMorgan Chase’s CEO, Jamie Dimon, expressed significant concern about the global impact of the conflict in Israel and Gaza as he reported the bank’s quarterly earnings. Dimon warned of potential consequences on energy and food markets, global trade, and geopolitical relationships, stating that this may be one of the most dangerous times the world has experienced in decades. In addition to the conflict, Dimon also highlighted other risks such as high inflation and rising interest rates.

Despite these concerns, JPMorgan and other major banks are performing well. JPMorgan reported a 35% increase in profit, reaching $13.2 billion in the third quarter compared to the previous year. Executives at the bank stated that the impact of the regional banking crisis earlier this year, which resulted in JPMorgan’s acquisition of First Republic, is gradually diminishing.

According to Mr. Dimon, “U.S. consumers and businesses generally remain healthy,” although consumers may be reducing their excess cash buffers. Wells Fargo also exceeded analysts’ expectations with third-quarter profit of $5.8 billion, a 61% increase from last year. However, the bank’s CEO, Charles W. Scharf, mentioned signs of stress among customers due to the slowing economy. Borrowers are reducing their loan balances, which benefits consumers but presents challenges for banks that rely on lending as a revenue source. Scharf noted a modest increase in losses on bad debts.

Citigroup reported a 2% gain in profit, reaching $3.5 billion in the third quarter, slightly exceeding expectations. CEO Jane Fraser emphasized that each of the bank’s five core business lines experienced revenue growth compared to the previous year.

Mark Mason, the Chief Financial Officer of Citigroup, stated that “the consumer remains quite resilient.” Although payment rates and spending are slightly decreasing, customers are still spending and paying off credit card balances more consistently compared to pre-pandemic levels in 2019.

Mason added, “The U.S. keeps surprising us with its resilience,” expressing optimism about the possibility of a soft landing for the economy. The stock prices of these three banks increased by approximately 3% on Friday, surpassing the overall market performance. Dimon mentioned that all banks are in regular communication with each other regarding the potential impacts of international conflicts, describing the current situation as climbing the “wall of worry.”

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