Jamie Dimon says the next credit crisis will be 'worse than people expect' — here's what big bank earnings have revealed

Here's why JPMorgan is preparing, along with other takeaways from the big banks' 1Q26 earnings reports.

Volatile markets are good for big bank trading

Many of the big banks are reporting high profits this quarter. Citigroup's net income, for example, is up 42% (3), while Morgan Stanley's net income is up more than $1 billion, from $4.3 billion in 1Q25 to $5.6 billion in 1Q26 (4).

One factor that can explain why profits are up is the same market volatility that's causing gas and grocery prices to skyrocket, as banks can make money from market volatility through trading. The combined trading revenue of JPMorgan, Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanley and Bank of America was around $45 billion for 1Q26, according to the Wall Street Journal (1).

Comparatively, their combined trading revenue was just over $30 billion last quarter (4Q25), and under $40 billion in 1Q25.

Trading wasn't the only area where banks saw revenue increases, as many of the banks saw double-digit growth from wealth management. Goldman Sachs credited their 12% increased global wealth and investment management revenue (5) to "higher asset management fees, up 15% to $4.2 billion, reflecting higher market valuations and strong assets under management flows."

This essentially means the bank is managing more high-quality assets than it was before.

JPMorgan is preparing for the next recession to be worse than average

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

During expansion, more people are taking out loans or other forms of credit, and those loans are good quality — people are less likely to be delinquent with their payments. During contraction, fewer people are taking loans and more people are falling behind.

Contractions in a credit cycle are often (but not always) tied to recessions. They're also worse for the banks' bottom lines. Dimon, however, doesn't explicitly say that he thinks a recession is coming in the quarterly earnings call.

"I'm not forecasting anything," Dimon said (2). "I'm simply saying, for JP Morgan, we have to be prepared for a recession, and that you could have stagflation. Obviously, if you have stagflation and higher rates for longer and credit spreads gap out, that will put a lot of stress and strain on leveraged companies as they refinance."

In a recent chairman letter (7), Dimon says he thinks the next credit cycle will be worse because credit standards have been weakening "across the board." He also says that private credit isn't very transparent, which means people will sell based on predictions rather than actual losses.

How you can prepare your wallet for a potential recession

Dimon says it's hard to predict which industry will be hit the hardest by a recession. This means that predicting whether a specific company or set of companies in your portfolio will tank, leaving a significant hole in your investments, is rather difficult.