JPMorgan Says Stress Test Shows Lender Can Survive ShockDawn Kopecki
JPMorgan Chase & Co., the largest U.S. bank, said internal stress tests show the company would come through an economic crisis with more than enough capital to stay in business.
JPMorgan’s Tier 1 common ratio would be at least 8.5 percent in a scenario designed to measure how the firm would perform during a severe crunch, the New York-based bank said today in a presentation on its website.
The bank would show a net loss before taxes of $0.3 billion from the second quarter of 2013 through the middle of 2015, with $32.1 billion in loan losses and $17.5 billion in trading and counterparty losses.
The biggest U.S. banks must run their own tests on how they would fare during a crisis to supplement those conducted by the Federal Reserve six months earlier. The central bank reports results each March based on different economic assumptions. The most recent round showed 17 of the 18 largest firms surviving a deep recession.
JPMorgan said it would have been more conservative in its assumptions if it had been able to incorporate feedback from the Federal Reserve before running the results in late March.
Goldman Sachs Group Inc., Bank of America Corp., Wells Fargo & Co. and Citigroup Inc. also concluded their firms would ride out a shock.
Goldman Sachs said it could handle a crisis that sends stocks down 40 percent and produces $20 billion in trading losses for the firm. Bank of America, ranked second by assets among U.S. lenders, foresaw a $26.1 billion cumulative deficit. Citigroup, ranked third by assets, found it would exceed capital minimums even after sustaining about $43 billion in loan losses and $10 billion in trading and counterparty losses.
Goldman Sachs and Citigroup are based in New York. Bank of America has its headquarters in Charlotte, North Carolina.
JPMorgan’s stock advanced 1.1 percent today to $53.14, bringing the gain for this year to 21 percent.