JPMorgan predicts 2024 revenue boost as rate expectations shift

JPMorgan predicts 2024 revenue boost as rate expectations shift

JPMorgan Chase (JPM) has boosted expectations for a key revenue source in 2024, in part due to fewer expected rate cuts from the Federal Reserve.

The nation’s largest bank now expects to generate $91 billion in net interest income this year, excluding trading revenue, up $2 billion from what it forecast in April.

Net interest income measures the difference between what banks earn from their assets and what they pay out in deposits.

Higher interest rates allow big banks to charge more for their loans, which can increase their net interest income. And JPMorgan now expects only two rate cuts this year, compared to the six it previously hoped for.

JPMorgan stock rose 1% in premarket trading Monday, hitting new highs.

The bank disclosed its net interest income at the start of its business. annual investor day in Manhattan, where the bank’s followers gathered to hear from CEO Jamie Dimon and his management team.

Executives will provide updates and forecasts for all of the bank’s key business units. Dimon will also speak, and investors will be watching for any discussion of succession or how long the 68-year-old plans to stay in this top job.

Net interest income has been a priority for many bank investors over the past year. Smaller banks have struggled to boost this measure over the past year as interest rates and deposit costs soared.

There were some signs in the first trimester that the Fed’s high rates were starting to weigh on growth, even at JPMorgan and other big lenders.

JPMorgan’s NII fell 4% from the fourth quarter to the first quarter, its first sequential decline in nearly three years.

JPMorgan predicts 2024 revenue boost as rate expectations shift

JPMorgan Chase CEO Jamie Dimon attends the Choose France summit outside Paris on May 13. LUDOVIC MARIN/Pool via REUTERS (via REUTERS/Reuters)

Depositors seek higher yields, as is the case at smaller banks, and move their money into products such as certificates of deposit for which JPMorgan must pay a higher rate.

On Monday, as JPMorgan raised its forecast, it attributed the change to fewer rate cuts and “better-than-expected repricing and migration performance.”

The bank also said in documents released earlier today that it was increasing its spending budget by $1 billion to $92 billion, reflecting a contribution to its charitable foundation.

That would mean JPMorgan’s spending would increase by $6.3 billion from last year.

JPMorgan also increased its technology budget to $17 billion, an increase of $1.7 billion (24.5%) from last year.

The bank reiterated its intention to increase its number of branches by 500 over the next three years and announced the launch of the JPMorgan Private Client brand, a concierge service intended to target affluent customers.

The launch is accompanied by the deployment of branches under the JPMorgan brand.

David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto and other areas of finance.

Click here for in-depth analysis of the latest stock market news and events that move stock prices..

Read the latest financial and business news from Yahoo Finance

Source Reference

Latest stories