Company says it doesn't expect further stimulus
How many loans will go bad due to COVID?
JPMorgan doesn't know. The company has provisioned about $34B for losses but in comments on the conference call said losses could be $20B more or $10B less depending on the course of the pandemic and whether or not there are further stimulus payments. Currently, they haven't built in any new stimulus money into their loss expectations so that's likely to be a tailwind whenever it comes.
Another upshot is that consumers continue to do relatively well. They note that 92% of consumers coming off deferrals are current.
Unsurprisingly, mortgages are strong but fees from credit cards and auto loans were also strong. The company warned that if it may take awhile for losses to escalate. They warned that if there's a big increase in soured loans it will be late in 2021.
In terms of spending, the company said credit card spending was down 8% y/y, which is a big improvement from -23% in Q2.
JPMorgan shares are trading at $103.50 from $102.65 at the close yesterday. A broader risk-averse tone is setting in.
