Key topics:JPMorgan warns of more credit losses after Tricolor, First Brands collapseInvestors flee BDCs as private-credit market cracks widenBig banks post record earnings but caution on economic risks.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Sridhar Natarajan.Investors spooked by the implosion of auto lender Tricolor Holdings and car-parts supplier First Brands Group got little reassurance Tuesday from the head of the biggest US bank.“My antenna goes up when things like that happen,” Jamie Dimon, JPMorgan Chase & Co.’s chief executive officer, said on a call with analysts. “I probably shouldn’t say this, but when you see one cockroach, there are probably more. Everyone should be forewarned on this one.”The pair of bankruptcies were a shock for the credit markets, where companies have been borrowing at a record pace while handing investors outsized returns. And Dimon, fresh off posting results that put his bank on track for another record year, said there could be more pain than usual when the economy takes a turn for the worse.“I suspect when there’s a downturn you will see higher-than-normal downturn type of credit losses in certain categories,” he said. “Look at the price of the BDCs and their publicly traded private credit facilities and do the homework,” he said, referring to business development companies..Even as JPMorgan, Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc. kicked off third-quarter earnings season by posting revenue that beat analysts’ estimates, some of their leaders took turns offering warnings about potential troubles with lending or signs of economic weakness, including in the labor market. While results sent shares of Citigroup and Wells Fargo higher, the downbeat notes and rising compensation costs trimmed prices at JPMorgan and Goldman..Read more:.JPMorgan Chase & Co CEO says AI will revolutionise the banking landscape.In drawing attention to investors’ growing disillusionment with public vehicles that hold private-debt investments, Dimon touched on a niche corner of the market where investors are on the lookout for signs of widening cracks in debt markets.Investors have been fleeing BDCs, seen as a proxy for the $1.7 trillion private-credit market, as they cut distributions available to shareholders. That has opened a widening gap between the broader equity market and private-credit BDC stocks. Last month, the $75 billion non-traded Blackstone Private Credit Fund, the largest in the industry, said it was reducing its shareholder payouts.A growing part of banks’ loan books is providing financing to private-market players that are encroaching on the banks’ traditional commercial lending territory. Chief Financial Officer Jeremy Barnum and his Wells Fargo counterpart, Michael Santomassimo, reassured analysts that much of their exposures are to large, established private-credit players.Still, Dimon offered a caveat.“I expect it to be a little bit worse than other people expect it to be, because we don’t know all the underwriting standards that all these people did,” he said. “They know what they’re doing, they’ve been around a long time, but they’re not all very smart.”At Citigroup, CEO Jane Fraser said growth in the US economy is still humming, while also pointing to signs that some sectors are cooling. She said the bank is keeping a close eye on the US labor market, echoing a similar warning from Dimon, who also reiterated his concern about the risk of sticky inflation.“Just because things are fine now, doesn’t mean they’ll be great forever,” JPMorgan’s Barnum said on the earnings call.Such notes of caution were a sharp contrast to the results being posted by their banks. JPMorgan is on track for another year of record revenue, buoyed by revved up dealmaking, buoyant trading and signs of a resilient US consumer. Citigroup, meanwhile, has emerged as the best performing big US bank stock as it continues to surpass analysts’ estimates under Fraser’s turnaround plan for a bank hamstrung by years of regulatory headaches.JPMorgan’s smaller rival, Goldman, notched its best third-quarter results on record, benefiting the most among its peers from a surge in dealmaking this year. That’s on the back of the busiest quarter for initial public offerings since 2021 and almost $1 trillion of deals announced globally in the three months ending Sept. 30.Still, the Wall Street bank paired strong results with a warning to its staff Tuesday that more job cuts are coming this year as it fends off pressure from rising expenses..Read more:.Trump’s tariff strategy: Economic risks and uncertain rewards.Wells Fargo emerged as another third-quarter winner, as it set out higher profitability goals. That comes in the wake of the Federal Reserve releasing the bank from a punitive asset-cap penalty for past misdeeds, which had constrained growth and left the lender falling behind its bigger rivals.Wells Fargo’s new return on tangible common equity target of 17% to 18% offers some signs to investors on how the bank hopes to turbocharge growth.Still, the sudden collapse of Tricolor, which forced a $170 million charge-off at JPMorgan, stands as a flashing yellow light for even the most optimistic investors.“It is not our finest moment,” Dimon said..© 2025 Bloomberg L.P.