JPMorgan Chase & Co. shares fell after President Daniel Pinto said analysts are being too optimistic in projecting next year’s expenses and net interest income.
JPMorgan president Daniel Pinto said the current Net interest income(NII) estimate of $89.5 billion is “not very reasonable” because the Federal Reserve is cutting interest rates. “I think that that number will be lower,” Pinto said. He declined to give a specific figure.
The announcement added to a more negative outlook for the other Largest US Banks after David Solomon, Goldman Sachs Group Inc.’s CEO, said that trading revenue at his firm is on track to drop 10% in the third quarter.
Net Interest Income: The difference between the interest income a bank earns from its lending activities and the interest it pays to depositors. Net interest income = Interest earned – interest paid. When interest rates decline, new loans made by the bank and new bonds it purchases will yield less.
“As rates go lower, you have less pressure on repricing of deposits,” Pinto said. “But as you know, we are quite asset-sensitive.” Federal Reserve interest-rate cuts in coming months, Pinto said those tailwinds are diminishing.
JPMorgan’s net interest income(NII) missed analysts’ estimates for Q2 because of higher-than-expected costs. Pinto said that expectations for 2025 expenses were also too optimistic. The executive said third-quarter investment banking fees could rise 15% and market revenue may increase by just 2%.
Pinto said “very strong performance” in debt capital markets is contributing to the revenue increase for investment banking. For the mergers-and-acquisitions business, Pinto said to expect revenue to be “flattish overall.”
Pinto also highlighted opportunities for growth within the consumer business, particularly in the premium segment and auto loans. He emphasized that wealth management is a key focus area for the bank’s overall consumer business strategy.
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