JP Morgan to bolster provisions for commodities exposure

JP Morgan announced it intended to bolster its provisions against possible losses arising from the commodity space.

In the first quarter of 2015, the lender would add $500m in provisions against potential losses for oil and gas and another $100m to guard against the same from metals and mining, a presentation prepared ahead of its Investor Day on Tuesday showed.

Those reserves stood at $815m and $240m at the end of 2015.

A note in the same presentation indicated that under a 'stress' scenario of approximately $25 per barrel lasting for 18 months, which resulted in incremental borrowings and increases in loss given defaults, might require an incremental reserve build of about $1.5bn.

As of 18:08 shares in JP Morgan Chase were 3.76% lower at $56.37 in NYSE trading, whereas the KBW Bank Index was up by 2.14% to 62.15.