Updated April 12th, 2024 at 19:38 IST

JPMorgan profit rises 6% despite interest income forecast falling short

The bank's net interest income was impacted by expectations of potential interest rate cuts by the US Federal Reserve later this year.

Reported by: Business Desk
JPMorgan | Image:JPMorgan
Advertisement

JPMorgan earnings: JPMorgan Chase posted a 6 per cent rise in profit during the first quarter, but its shares dipped after the bank's forecast for interest income fell below analysts' expectations.

The bank's net interest income (NII), which is the difference between what it earns on loans and pays out for deposits, was impacted by expectations of potential interest rate cuts by the US Federal Reserve later this year.

Advertisement

CEO Jamie Dimon maintained a cautious stance despite some optimism about the economy's trajectory. He highlighted various uncertain factors, including global conflicts, inflationary pressure, and quantitative tightening.

JPMorgan's full-year NII, excluding trading, is projected to be $89 billion, subject to market fluctuations. Although this is an increase from the previous estimate of $88 billion, it fell short of the $90.68 billion analysts had anticipated.

Advertisement

Shares of the bank declined by 3.5 per cent in pre-market trading, as executives had previously cautioned that the surge in NII might not be sustainable.

Despite the share drop, analysts viewed the quarter positively, noting strong financial performance. However, they pointed out an increase in non-interest expenses as a concern.

Advertisement

JPMorgan allocated $725 million to replenish a government deposit insurance fund, less than the $3 billion set aside at the end of the previous year. This contributed to an increase in expense forecasts to $91 billion.

In contrast to some peers reducing staff, JPMorgan expanded its workforce by approximately 2,000 employees compared to the previous year.

Advertisement

Profit for the first quarter stood at $13.42 billion, or $4.44 per share, up from $12.62 billion, or $4.10 per share, a year earlier.

The bank's loans increased by 16 per cent to $1.31 trillion, while NII rose by 11 per cent to $23.2 billion. Excluding the impact of recent acquisitions, NII still saw a 5 per cent increase from last year.

Advertisement

JPMorgan set aside $1.88 billion for provisions for credit losses, down from $2.28 billion in the previous year.

Trading revenue fell by 5 per cent to $8 billion, with fixed income, currency, and commodities (FICC) revenue dropping by 7 per cent, while equities remained flat.

Advertisement

On the other hand, investment banking revenue surged by 27 per cent to $2 billion, primarily driven by higher fees from debt and stock underwriting.

(With Reuters inputs)
 

Advertisement

Published April 12th, 2024 at 19:38 IST