JP Morgan, Wall Street’s biggest bank, has put aside $8.3bn (£6.6bn) to cover potential loan losses as it braces itself for a “fairly severe recession” caused by the Covid-19 outbreak. The provision – much of which is earmarked to cover consumer credit card debts – is the biggest sum put aside for credit losses since the financial crisis in 2009. It resulted in JP Morgan’s earnings for the first three months of the year plunging 69% to $2.9bn compared with $9.2bn a year earlier. The chairman and chief executive, Jamie Dimon, said the lender had had a strong start to the year but that JP Morgan needed to prepare for the realities of an economic downturn caused by the Covid-19 outbreak as well as the recent plunge in oil prices. Dimon said: “The underlying results of the company were extremely good. However, given the likelihood of a fairly severe recession, it was necessary to build credit reserves of $6.8bn, resulting in total credit costs of $8.3bn for the quarter.” The bulk of the extra provisions – about $4.4bn – are meant to cover consumer loans that might go sour, most of which is expected to come from credit cards. The remaining $2.4bn will help JP Morgan prepare for potential loan losses from business customers, with the largest losses expected from oil and gas companies, as well as real estate and retail. Dimon said the bank was well-capitalised, with around $1tn worth of of liquid assets ready to be deployed to cover losses if necessary. However, analysts believe it is still too soon to predict how severe the economic downturn caused by coronavirus could be. Neil Wilson, the chief market analyst for Markets.com, said: “The bank is preparing for a severe recession and needs to set aside capital to cover expected losses – the problem is no one has a clue how big these might be. I should stress that even the cleverest banks won’t know just what the damage will be in a situation where the economy is stopped and then restarted.”