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JPMorgan Chase shares experienced a 5% decline after the bank’s president expressed concerns about overly optimistic expectations regarding net interest income and expenses for 2025. While aiming to be near the 2024 NII target of $91.5 billion, the projection for next year of approximately $90 billion was deemed unrealistic due to anticipated interest rate cuts by the Federal Reserve, according to JPMorgan President Daniel Pinto at a financial conference. Shares of the bank fell over 7% during the session, marking the steepest decline since June 2020.

As the largest U.S. bank in terms of assets, JPMorgan has seen success in recent years with stronger-than-expected NII growth fueled by increased deposits and loan activity. However, investor concerns have arisen over the bank’s future performance, alongside broader worries about a slowdown in U.S. economic growth. NII, a key revenue driver for banks, represents the difference between deposit costs and earnings from lending or investments. Lower Interest rates can impact new loan and bond yields, presenting challenges for banks.

While declining rates may alleviate pressure on deposit repricing, they also result in lower yields on new assets, complicating the financial outlook. Pinto indicated that the analyst estimate of around $94 billion for 2025 expenses may be too optimistic due to ongoing Inflation and increased investments by the firm. Additionally, JPMorgan expects trading revenue in the third quarter to remain flat or increase by approximately 2% year-over-year, with a projected 15% rise in investment banking fees.

The trading performance aligns with Goldman Sachs’ recent announcement of an anticipated 10% drop in trading revenue for the quarter, attributed to challenging trading conditions in August and a tough year-over-year comparison.

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