The quarterly profit of JPMorgan Chase & Co fell by more than two-thirds as the coronavirus or COVID-19 pandemic and record low prices of oil forced the largest bank of the US to boost reserves for protecting it from a wave of potential defaults in the loan.

The provision for the credit losses went up over five-fold to $8.3 billion in the first quarter, with the two-thirds of the additional reserves of credit taken for the consumer loans.

JPMorgan Chase & Co witnessed a slump in quarterly profit

JP Morgan Chase
JP Morgan Chase Reuters

"Given the likelihood of a fairly severe recession, it was necessary to build credit reserves," JPMorgan Chief Executive Officer Jamie Dimon said in a statement. Dimon had warned shareholders last week that the coronavirus crisis would hurt profits "meaningfully" through 2020. The pandemic has shut down businesses, put nearly 10 million people out of work in the United States alone and is expected to cause a global recession not seen in generations.

The bank's net income fell to $2.87 billion, or 78 cents per share, in the quarter ended March 31, compared with $9.18 billion, or $2.65 per share, a year earlier.

Analysts on average had expected $1.84 per share, according to Refinitiv. It was not immediately clear if the reported numbers were comparable with estimates. Profit was also hurt by a $951-million charge in its investment bank due to a markdown on the bank's bridge book. There have so far been more than 1.8 million reported cases of COVID-19, the deadly respiratory disease stemming from the virus, and 115,242 deaths, according to a Reuters tally.

(With agency inputs)