Chase Q1 earnings reflect crisis preparation - Business Insider - Business Insider

This story was delivered to Business Insider Intelligence Banking Briefing subscribers earlier this morning.To get this story plus others to your inbox each day, hours before they're published on Business Insider, click here.Stay up-to-date with our latest coverage on the impacts of coronavirus on technology, marketing, and the digital economy here.Chase has reported earnings for Q1 2020, and its results are already beginning to show the profound effects of the ongoing coronavirus crisis. The bank's net income of $2.9 billion was down a staggering 69% year-over-year (YoY) from $9.2 billion in Q1 2019, and profits in its consumer unit dove 95% YoY from $4 billion in Q1 2019 to $191 million in Q1 2020, per The Wall Street Journal. On a more positive note, the bank saw its mobile active customers grow 11% YoY to 38.2 million, a rate similar to the 12% YoY growth it saw in Q4 2019.

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The bank's income was largely affected by an increase in credit costs as Chase builds up its reserve in preparation for the effects of the coronavirus on clients. The pandemic hit the US economy hardest only at the very end of Q1, but Chase's credit costs in the period still totaled $8.3 billion, comprising $1.5 billion in charge-offs and a whopping $6.8 billion in buildup to its credit reserves.The latter is being set aside because the bank is preparing for the effects of a recession and the accompanying possible losses on loans made to consumers and companies working to weather the coronavirus crisis, per the Journal. And the bank may not stop there, saying it might set aside even more of its profits in the future to cover loan losses if its dire expectations for Q2 prove true, such as a catastrophic expected unemployment rate of 20% (twice as high as the 10% peak rate during the 2007-2009 financial crisis, per Newsweek).While Chase is clearly bracing for serious loan losses, its customer-focused approach to the coronavirus could yield it favor with clients in exchange. Even though losses from lending will be damaging to Chase's bottom line, it is taking care to put helping customers first, noting in its earnings presentation that it is waiving and refunding some fees, not reporting payment deferrals to credit bureaus, and continuing to extend credit to qualified consumers and businesses to help them weather the storm.These measures to continue helping customers through the crisis even in the face of major losses could help the bank curry favor with clients and give it a human touch despite its monolithic size.Want to read more stories like this one？ Here's how to get access:Business Insider Intelligence analyzes the banking industry and provides in-depth analyst reports, proprietary forecasts, customizable charts, and more. /> /> Check if your company has BII Enterprise membership access.Sign up for the Banking Briefing, Business Insider Intelligence's expert email newsletter tailored for today's (and tomorrow's) decision-makers in the financial services industry, delivered to your inbox 6x a week. /> /> Get StartedExplore related topics in more depth. /> /> Visit Our Report StoreCurrent subscribers can log in to read the briefing here.