JPMorgan Chase CEO and Chairman Jamie Dimon gestures as he speaks during the U.S. Senate Banking, Housing and Urban Affairs Committee's oversight hearing on Wall Street firms, on Capitol Hill in Washington, DC
Evelyn Hockstein | Reuters
JPMorgan Chase said Wednesday evening that the Federal Reserve overestimated a key measure of income in the major bank's recent stress test, and that losses during the investigation should actually be higher than what the regulator found.
The bank took the unusual step of issuing a press Edition minutes before midnight ET to announce its response to the Fed's findings.
JPMorgan said the Fed's projections for a measure called “other total income” — which represents income, expenses and losses excluded from net income — “appear too large.”
Below the Fed's table of projected revenues, earnings and losses in 2026, JPMorgan was allocated $13 billion to OCI, more than any other of the 31 lenders in this year's test. It also estimated that the bank would face about $107 billion in credit, investment and trading losses in that scenario.
“If the company's analysis were correct, the resulting stress losses would be modestly higher than those disclosed by the Federal Reserve,” the bank said.
The error means JPMorgan may need more time to complete its share buyback plan, according to a person with knowledge of the situation. Banks were expected to begin announcing these plans after the market close on Friday.
The news is a wrinkle in the Federal Reserve's announcement Wednesday that all 31 banks in the annual exercise cleared the hurdle of being able to weather a severe hypothetical recession while maintaining adequate capital levels and the ability to lend to consumers and retain companies.
Last year, bank of America And Citi Group made similar announcements, proverb that estimates of their own future earnings differed from the Fed's results.
Banks have complained that aspects of the annual survey are opaque and that it is difficult to understand how the Fed arrives at certain results.
