JPMorgan Sets Aside More Cash for Souring Oil and Gas Loansby
JPMorgan added $529 million to provision for loan losses
The bank also set aside $162 million for metals and mining
The pain isn’t over for the Wall Street banks that financed the oil boom.
JPMorgan Chase & Co., which kicked off bank earnings Wednesday, added $529 million to its provision for loan losses on oil, natural gas and gas pipelines, bringing the total set aside to cover souring energy bets to more than $1.3 billion. The addition was more than the $500 million the bank forecast. U.S. oil prices have declined 19 percent in the past year to about $42 a barrel.
"While oil prices have improved somewhat in March, they do remain near historically low levels and the market is not expecting the recovery to be strong," Marianne Lake, JPMorgan’s chief financial officer, said in a conference call Wednesday with investors. "Further, natural gas, which is a meaningful portion of our portfolio, does remain depressed."
JPMorgan also set aside $162 million to cover potential losses to its metals and mining portfolio, again higher than the $100 million increase forecast in February. The Bloomberg World Mining Index of 98 companies has declined 21 percent in the past year.