Jamie Dimon warns the next credit crisis could be severe — take these steps to protect your wallet now

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Despite — or maybe because of — volatile markets and increasing consumer costs, the nation's largest banks continued to post strong profits in their second-quarter earnings, showing that the banking sector remains resilient even as concerns about the economy persist (1). But JPMorgan Chase (NYSE:, at least, is still preparing for a possible recession.

During JPMorgan's earnings call earlier this year, Chairman and CEO Jamie Dimon declined to predict whether the U.S. was heading for a recession (2); however, he has repeatedly warned that whenever the next credit cycle arrives, losses on leveraged lending are likely to be "worse than people expect relative to the scenario."

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Here's why JPMorgan is preparing for hard times, plus some other takeaways from the big banks' latest earnings reports.

Volatile markets are good for big bank trading

Many of the nation's largest banks have continued to report strong earnings, with trading revenue benefiting from periods of elevated market activity and investor uncertainty.

When markets get choppy, it can create more opportunities for banks' trading desks as investors buy, sell and adjust their portfolios in response to changing conditions. But that same volatility can also be a warning sign for everyday investors, since it often comes with bigger swings in stock prices and more uncertainty about where the economy is headed.

But trading wasn't the only area where banks saw revenue increases, as many saw double-digit growth from wealth management.

Bank of America credited their 12% increase in global wealth and investment management revenue to "higher asset management fees, up 15% to $4.2 billion, reflecting higher market valuations and strong assets under management flows" (5).

In other words, the bank was overseeing more client assets, helped by higher market valuations and continued investment flows.

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