What's going on?

JPMorgan reported worse-than-expected quarterly earnings on Wednesday, after the US bank was forced to go through the motions all over again.

What does this mean?

JPMorgan has spent the last few quarters funneling �loan loss reserves� � funds it set aside in case pandemic-hit customers couldn�t pay their debts � back into its coffers. But last quarter, it had to rebuild a near-$1 billion pile of them, as inflation and higher interest rates caused the risk of defaults to rise. Those interest rate hikes did benefit the bank, in fairness: there was a 7% uptick in net interest income compared to the same time last year. But with revenue from investment banking falling by a worse-than-expected 28%, any positive sounds were drowned out: the bank�s overall profit fell by 42%. JPMorgan was cautious in its outlook too, and investors � unappeased by the approval of a $30 billion share buyback program � sent its stock down.

Why should I care?

The bigger picture: All banks for one, one bank for all.
Investors had already been anticipating that JPMorgan�s investment banking revenue would drop off, as higher interest rates and lower stock prices deterred companies from striking deals and listing on the stock market. But its results also showed something unexpected: that the toll of loan loss reserves offset most of the benefit from higher interest rates. And since JPMorgan is the first of the big US banks to report its quarterly earnings, that could set the tone for what�s to come�

Zooming out: Financial firms aren�t all in the same boat.
Some financial firms are going to be just fine: BlackRock � the world�s biggest investment manager � announced on Wednesday that investors poured a net $114 billion more into its range of funds. And since it makes money from the fees charged on those investments, its profit jumped by a better-than-expected 18% compared to the same time last year.