Jamie Dimon says next credit crisis will be ‘worse than people expect’ – here’s what big bank earnings revealed

Despite—or perhaps because of— volatile markets and rising consumer spending, the latest quarterly earnings reports from major banks show that banks are doing well (1). But JPMorgan Chase [NYSE:JPM]at least, it is still preparing for a possible recession.

During JPMorgan’s 1Q26 quarterly call, chairman and CEO Jamie Dimon refused to predict that the US is headed for recession (2). But he said that, whenever the next debt cycle comes, he thinks “it’s going to be worse than people expect.”

Here’s why JPMorgan is preparing, and some takeaways from the big banks’ 1Q26 earnings reports.

Most major banks reported higher profits this quarter. Citigroup’s net income, for example, rose 42% (3), while Morgan Stanley’s net income was over $1 billion, from $4.3 billion in 1Q25 to $5.6 billion in 1Q26 (4).

One factor that could explain why profits are rising is the same market volatility that causes energy and grocery prices, as banks can make money from market volatility by trading. The combined trading income of JPMorgan, Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanley and Bank of America was approximately $45 billion in 1Q26, according to the Wall Street Journal (1).

In comparison, their combined trading capital was just over $30 billion in the previous quarter (4Q25), and less than $40 billion in 1Q25.

Trading was not the only area where banks saw an increase in income, as many banks saw double-digit growth in wealth management. Goldman Sachs revealed that 12% of them increased global wealth and investment management income (5) to “higher asset management costs, which rose 15% to $4.2 billion, reflecting higher market values ​​and stronger assets under management.”

This means that the bank is holding assets of a higher quality than before.

One of the topics Dimon discusses is the credit cycle, which is the idea that credit goes through cycles of expansion and contraction (6).

During the expansion, more people take out loans or other types of debt, and those loans are of good quality – people are less likely to be delinquent on their payments. During a recession, fewer people take out loans and more people fall behind.

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Contracts in the credit cycle are often (but not always) tied to recessions. They are also worse for banks’ bottom lines. Dimon, however, didn’t say outright that he thinks a recession is coming on the quarterly earnings call.

“I’m not predicting anything,” said Dimon (2). “I’m just saying, at JP Morgan, we have to prepare for a recession, and that you might have stagflation. Obviously, if you have stagflation and high rates for a long time and the credit gap spreads the gap, that’s going to put a lot of pressure and stress on funded companies as they recover.”

In the chairman’s latest letter (7), Dimon says he thinks the next credit cycle will be worse because credit standards have been weakening “across the country.” He also says private loans are highly unpredictable, meaning people will sell based on speculation rather than actual losses.

Dimon says it is difficult to predict which industry will be hit hardest by the recession. This means that predicting whether a particular company or group of companies in your portfolio will do well, leaving a big hole in your investment, is very difficult.

The best way to prepare for the unexpected is to diversify your investment portfolio. That way, your goal will remain stable even if the industry you’ve invested in takes a big hit.

More and more companies are laying off more people (8), and the recession may make it more difficult to find the next job if you are affected. It’s common advice to save three to six months of expenses in your emergency fund, but it may be a good idea to save even more if you’re worried about high unemployment rates.

This is especially true if you work in an industry that is currently seeing a lot of layoffs, such as software engineering.

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We rely only on vetted sources and reliable third-party reporting. For details, see our conduct and guidelines.

The Wall Street Journal (1),(8); JPMorgan Chase (2), (7); Citigroup (3); Morgan Stanley (4); Bank of America (5); Federal Deposit Insurance Corporation (6).

This article first appeared on Moneywise.com under the headline: Jamie Dimon says next credit crisis will be ‘much worse than people expect’ – here’s what big bankers have revealed

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