Coronavirus pandemic seems to be affecting each sector of different economies without favor, it’s now clear different industries are being affected directly or indirectly by this untimely global pandemic.
First it started by the airline industry and the hotel industry taking the heat generated by outbreak of deadly coronavirus since countries started suspending flights and closing borders therefore directly affecting these two industries. A few weeks later the ripple effect has trickled down to each sector of the economy.
U.S largest bank JPMorgan Chase & Co. (JPM) is contemplating dropping 2020 dividend for the company if the coronavirus crisis goes on for a prolonged period.
Chief executive officer of JPM, Jamie Dimon, has predicted a possible recession hinting out the bank might withdraw its dividend payment for the year if things continue with the down trend.
“If the board suspended the dividend, it would be out of extreme prudence and based upon continued uncertainty over what the next few years will bring,” said Dimon.
Dimon said the impact of this global pandemic will still be felt even past the coronavirus era, the CEO expects earnings of the bank to be affected for the entire year.
Nonetheless, Dimon was hopeful that despite this tough time, the bank will continue lending to its clients and ruled out any need of relief from the Federal Government.
In a letter authored by the CEO to the shareholders, he says that the bank might be forced to drop this year’s dividend payment if gross domestic product will drop by at least 35% in the second quarter.
According to the letter also, in a situation where unemployment level increase to 14% in the fourth quarter, the bank will also suspend dividend payment.
Citing reference to above information, times might be worse for an average U.S resident since unemployment is on the rise meaning these employees who have lost their jobs can’t access loans from banks.
Making matter worse, companies will withdraw from dividend payments which will further curtail money supply in the economy.
This pandemic is proving to be a tough time for the baking industry, Dimon says among challenges they are facing includes some employees getting sick, customer service call services are at an all-time high and local restrictions made the bank temporarily shut down some of its branches.