By KEN SWEET, AP Business Writer

NEW YORK (AP) – JPMorgan Chase braces for the possibility that customers ranging from credit card holders to oil companies will fail to repay billions of dollars in loans as the economy reeling from the coronavirus outbreak .

JPMorgan said Tuesday that first-quarter profit plunged nearly 70% as it increased its reserves for potentially bad loans by nearly $ 7 billion. The bank warned that it could further increase these reserves during the April-June period,

The coronavirus outbreak has shut down businesses across the country and put millions of Americans out of work. Borrowers who were in great shape just a few weeks ago are now in financial difficulty and are at risk of defaulting on their loans. The Federal Reserve and the US government are taking unprecedented steps to keep credit markets functioning and to provide households and small businesses with the funds they desperately need.

JPMorgan CEO Jamie Dimon said there was a need for the bank to set aside significant funds “given the likelihood of a fairly severe recession.” The last time JPMorgan had to increase the amount of bad debt reserve to such a degree was in the first quarter of 2009, at the height of the Great Recession.

The country’s largest bank by assets, JPMorgan, said its profit fell to $ 2.87 billion in the first quarter, from $ 9.18 billion in the same period a year earlier. Wells Fargo, the nation’s largest mortgage lender, said its profits fell 95%, increasing bad debt reserves by $ 3.1 billion.

JPMorgan is one of the largest credit card issuers in the country. Millions of Americans who lost their jobs are now at risk of defaulting on their credit card accounts. The bank also recorded loan losses in its wholesale lending division of the oil and gas industry and businesses that deal directly with U.S. consumers, such as retailers.

In total, JPMorgan has set aside over $ 8 billion for bad debt, but even that may not be enough. CFO Jennifer Piepszak told reporters on Tuesday that her credit losses were “a better estimate” based on the US unemployment rate hitting more than 10%, with a recovery in the second half of the year. She said after the quarter ended, the bank’s economists revised their estimate of US unemployment to 20% and expect gross domestic product to drop 40% in the second quarter.

Dimon told reporters he expects the reopening of the US economy to be “phased” over the next “weeks and months” – a scenario less rosy than what the White House has painted.

Banks like JPMorgan have tried to be as helpful as possible to politicians and the public in this pandemic, given that the financial sector was at the center of the latest economic crisis. Banks have given consumers longer grace periods for making credit card payments and loans, and waived the fees.

Most banks also continued to lend – they entered the crisis for the most part with strong balance sheets capable of withstanding the recession. JPMorgan said it allowed companies to leverage more than $ 50 billion in existing lines of credit and approved an additional $ 25 billion in new lines of credit last quarter.

A positive point in the bank’s results came from trading. Markets around the world were extremely volatile in the last quarter – the 11-year bull market in the United States came to a screeching halt in March – which gave Wall Street traders plenty of opportunities to trade. JPMorgan’s equity and bond trading income increased by 34% and 28%, respectively.

The bank’s first-quarter earnings of 78 cents per share missed the estimates, but analysts struggled for weeks to figure out how to measure the impact of the coronavirus on companies like JPMorgan and estimates varied wildly.

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