Shares of JPMorgan Chase Slide Slide as Bank Provides Disappointing 2024 Interest Income Guidance

JPMorgan Chase did better than people thought it would last Friday. They made more money and had higher revenue than what experts predicted. Here are the numbers compared to what analysts expected:

– They earned $4.44 for each share, while experts thought it would be $4.11.
– Their revenue was $42.55 billion, higher than the expected $41.85 billion.

The bank’s profit went up by 6% in the first quarter of the year, reaching $13.42 billion, or $4.44 per share.

This increase was partly because they took over the First Republic during a banking crisis last year. If you take away a certain fee related to last year’s bank troubles, they would have earned 19 cents more per share.

JPMorgan’s shares surged by 15% this year. (Credits: Google Finance)

Their revenue also went up by 8% to $42.55 billion. This increase was because they made more money from interest, mainly due to higher interest rates and more loans.

Looking forward to 2024, the bank expects to make around $90 billion in net interest income. This prediction hasn’t changed from what they said before.

Investors, some of whom anticipated JPMorgan to up its guidance by $2 billion to $3 billion for the year, seemed disappointed. Shares of JPM slipped 4.8% in early trading.

As reported by CNBC, Piper Sandler analyst Scott Siefers remarked “strikes us as ultra-conservative (and now leaves room to be revised upward later on), we suspect the unchanged outlook will disappoint investors,” in a note on Friday.

Wells Fargo and Citigroup report earnings on Friday. (Credits: Ildar Sagdejev)

JPMorgan recorded a $1.88 billion provision for credit losses in the quarter, notably lower than the $2.7 billion expected by analysts. The provision was 17% smaller compared to a year ago, with the firm releasing some reserves for loan losses instead of accumulating them, as it did previously.

Despite a general 5% decrease in trading revenue from a year earlier, fixed income and equities results exceeded analysts’ expectations by over $100 million each, reaching $5.3 billion and $2.7 billion, respectively.

JPMorgan CEO Jamie Dimon described the company’s results as “strong” across consumer and institutional segments, attributed to a resilient U.S. economy. However, he expressed caution regarding the future.

Further Dimon added, “Many economic indicators continue to be favorable.”

“However, looking ahead, we remain alert to many significant uncertain forces” including overseas conflict and inflationary pressures,” said Dimon.

Goldman Sachs, Bank of America, and Morgan Stanley will report next week.

While the largest U.S. bank by assets has managed the rate environment effectively since the Federal Reserve initiated rate hikes two years ago, smaller competitors have faced profit pressures.

The industry has been compelled to offer higher rates for deposits as customers move funds into instruments with better yields, thus compressing margins. Additionally, concerns are rising over increased losses from commercial loans, particularly on office buildings and multifamily residences, as well as higher defaults on credit cards.

Nevertheless, it’s anticipated that large banks will outperform their smaller counterparts this quarter.

JPMorgan’s shares have surged by 15% this year, surpassing the 3.9% increase of the KBW Bank Index.

It has also been scheduled by Wells Fargo and Citigroup to announce quarterly results on Friday, while Goldman Sachs, Bank of America, and Morgan Stanley will report next week.

Sajda Parveen
Sajda Parveen
Sajda Praveen is a market expert. She has over 6 years of experience in the field and she shares her expertise with readers. You can reach out to her at [email protected]
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