JPMorgan shares fell 5% after bank revised guidance on interest income and expenses | Wilnesh News

JPMorgan Chase The bank’s shares fell 5% on Tuesday after the bank’s president told analysts that expectations for net interest income and expenses in 2025 were too optimistic.

The president of JPMorgan Chase said that while the bank expects the NII target to reach a “broad target” of about $91.5 billion in 2024, the current estimate of about $90 billion next year is “not very reasonable” because of the Fed’s interest rate cuts. Daniel Pinto expressed at a financial meeting Meeting.

“I think the number will be lower,” Pinto said. He declined to give specific figures.

Shares of the New York-based bank fell more than 7% earlier in the session, their worst drop since June 2020, according to FactSet data.

JPMorgan, the largest U.S. bank by assets, has been a winner among lenders in recent years, benefiting from better-than-expected growth in NII as it took in more deposits and made more loans than expected. But uneasy investors are now worried about the outlook for bellwether bank stocks, as well as broader worries about slowing U.S. economic growth.

NII is one of the main ways banks make money, and is the difference between the cost of a bank deposit and the cost it earns by borrowing money or investing in securities. When interest rates fall, banks earn less on new loans they make and new bonds they buy.

Lower interest rates can help banks as customers slow down the shift from checking accounts to higher-yielding instruments like certificates of deposit or money market funds. But they also complicate matters by lowering yields on new assets.

“Obviously, as interest rates go lower, there will be less pressure to repricing deposits,” Pinto said. “But as you know, we are very asset sensitive.”

When it comes to spending, analysts’ forecasts of about $94 billion next year are “a little too optimistic,” Pinto said, because inflation persists and the company is making new investments.

“There are a number of factors that tell us the spending numbers may be slightly higher than currently anticipated,” Pinto said.

In terms of trading, JPMorgan Chase said it expects third-quarter revenue to be flat, up about 2% from the same period last year, while investment banking fees are expected to grow 15%.

Trading slows down with Goldman SachsThe company said on Monday that trading revenue would fall 10% in the quarter due to difficult year-over-year comparisons and difficult trading conditions in August.