(Reuters) – JPMorgan Chase said on Friday it expects annual income from interest payments to be lower than analysts’ expectations as the banking industry prepares for highly anticipated rate cuts from the U.S. Federal Reserve in the during the year.
The largest U.S. bank expects full-year net interest income of $89 billion, excluding trading activities, depending on market fluctuations. This estimate, higher than the previous one ($88 billion), however remains below the $90.68 billion expected by analysts, according to LSEG.
JPMorgan shares fell nearly 4% in pre-market trading. The bank’s executives have warned in recent months that its sharp rise in net profit cannot be sustained.
JPMorgan Chief Executive Jamie Dimon also maintained his cautious tone, despite growing optimism in recent months that the economy could gradually recover.
“Many economic indicators remain favorable. However, looking forward, we remain attentive to a number of significant factors of uncertainty,” he said in a statement.
He notably mentioned persistent inflation and quantitative tightening and “worrying” conflicts in the world.
The profit of the largest American lender for the quarter ended March 31, however, climbed 6% to reach 13.42 billion dollars (12.60 billion euros), or 4.44 dollars per share, against 12.62 billion, or $4.10 per share, a year earlier.
Rising interest rates in the United States have contributed to the increase in net interest income (NII), which is the share of banks’ revenues from loans and deposit-related expenses.
JPMorgan also added billions of dollars in loans to its balance sheet after buying bankrupt First Republic Bank last May. The acquisition also fueled its net interest income, which rose 11% to $23.2 billion.
Excluding the impact of First Republic, this figure is 5% higher than last year.
The lender also earmarked $725 million to replenish a government deposit insurance fund, which is less than the $3 billion provisioned at the end of last year.
Unlike its competitors who are reducing their workforce, JPMorgan has recruited around 2,000 people, or 5% more than a year earlier.
The bank recorded $1.88 billion in provisions for credit losses, up from $2.28 billion last year.
Its trading revenue fell 5% to $8 billion, with a 7% decline in fixed income, currencies and commodities (FICC) products and stagnation in stock market-linked products.
Revenue at JPMorgan’s investment banking business rose 27% to $2 billion, driven by higher fees charged on underwriting debt and equity securities.
Total revenue grew 9% to $41.93 billion.
(Reporting by Niket Nishant in Bangalore and Nupur Anand in New York; French version by Dagmarah Mackos)
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