JPMorgan shares slip as outlook overshadows profit rise

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Shares of JPMorgan Chase fell Friday, their biggest decline in nearly four years, as a disappointing outlook for its lending business overshadowed the largest U.S. bank’s first-quarter profit increase.

The lender said its net profit rose to $13.4 billion in the first quarter, up 6 percent from a year earlier and above analysts’ expectations. JPMorgan set aside less than analysts expected for loan losses.

But the bank’s forecast for net interest income disappointed investors and its shares closed down 6.5%, their biggest one-day decline since June 2020.

That reflects concerns that JPMorgan’s massive gains from rising interest rates over the past two years may have plateaued.

While JPMorgan raised its full-year guidance for NII – basically the difference between what it pays on deposits and what it earns on loans and other assets – outside its business trading at around $89 billion versus a previous forecast of around $88 billion, it left its outlook for total NII remaining unchanged at around $90 billion.

“While the guide still seems ultra-conservative to us. . . “We think the unchanged outlook will disappoint investors a bit and could weigh on the stock in the immediate future,” said Scott Siefers, an analyst at Piper Sandler.

Financial markets have adjusted their rate expectations in recent weeks, with the US Federal Reserve now planning to cut rates more slowly.

High interest rates have been good for America’s biggest banks, which have reaped billions of dollars in profits over the past two years by passing on interest rate increases to depositors more slowly than to borrowers.

But banks must ultimately pass on higher savings rates to depositors, according to JPMorgan and Wells Fargo, which also reported their results. Wells’ profits fell 7 percent in the first quarter from a year earlier.

Jeremy Barnum, JPMorgan’s chief financial officer, told analysts that customers were moving more money into accounts offering higher savings rates, eating into the bank’s lending margins.

“We still expect continued migration and yield-seeking behavior,” Barnum said.

JPMorgan also warned that it expects 2024 spending to be $91 billion, up from $90 billion, as it will have to pay about $725 million in additional fees to U.S. regulators to cover costs linked to regional bank failures. from last year.

JPMorgan Chief Executive Jamie Dimon said “many economic indicators remain favorable.”

But he added that “looking ahead, we remain alert to a number of significant uncertain forces”, pointing to a “worrying” global landscape and “a large number of persistent inflationary pressures”.

Rival Citigroup, meanwhile, reported better-than-expected quarterly profits, with the bank saying it was on track to cut 7,000 jobs this year. Citigroup shares fell 1.7 percent on Friday.

Bank of America, Goldman Sachs and Morgan Stanley will publish their results early next week.

Additional reporting by Harriet Clarifelt

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Sara Adm

Aimant les mots, Sara Smith a commencé à écrire dès son plus jeune âge. En tant qu'éditeur en chef de son journal scolaire, il met en valeur ses compétences en racontant des récits impactants. Smith a ensuite étudié le journalisme à l'université Columbia, où il est diplômé en tête de sa classe. Après avoir étudié au New York Times, Sara décroche un poste de journaliste de nouvelles. Depuis dix ans, il a couvert des événements majeurs tels que les élections présidentielles et les catastrophes naturelles. Il a été acclamé pour sa capacité à créer des récits captivants qui capturent l'expérience humaine.
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