KEY TAKEAWAYS
- JPMorgan Chase will release its first-quarter results before the bell on Friday.
- The largest U.S. bank is expected to report that net interest income fell from a record high in the fourth quarter.
- The bank is prepared for higher rates and challenging economic conditions, CEO Jamie Dimon told shareholders earlier this week.
JPMorgan Chase (JPM) will release its first-quarter results before the bell on Friday, and the largest U.S. bank is expected to report a decline in noninterest expenses that could help it offset a slight drop in revenue. net interest in a quarter. quarter by quarter.
The bank is expected to post net income of $12.57 billion, or diluted earnings per share of $4.13, according to analyst estimates compiled by Visible Alpha. That's little changed from the prior-year quarter, although it's seasonally up from the $9.31 billion in net income and $3.04 in diluted EPS it reported for the fourth quarter of 2023.
The bank's revenue is expected to grow 7.6% from the same period a year earlier, to $41.26 billion, likely complemented by higher trading income as stock markets recovered.
| Analyst estimates for the first quarter of 2024 | Fourth quarter of 2023 | First quarter of 2023 | |
| Net income | $41.26 billion | $38.57 billion | 38.35 billion dollars |
| Diluted earnings per share | $4.13 | $3.04 | $4.10 |
| Net income | 12.57 billion dollars | $9.31 billion | 12.62 billion dollars |
Key Metric: Net Interest Income
JPMorgan's net interest income hit an all-time high of $24.18 billion in the fourth quarter. But it likely fell to $23.28 billion in the first quarter, as the bank's net interest margin likely fell from 2.81% to 2.76%, according to Visible Alpha estimates.
Still, that would mark a 12% increase from $20.83 billion in the first quarter of 2023, as interest income has increased substantially post-pandemic in the higher interest rate environment.
Business focus
More persistent inflation than expected, which was reaffirmed by the release of consumer price data on Wednesday, has dashed hopes that the Federal Reserve will cut interest rates any time soon. Federal Reserve officials have repeatedly said they need more confidence that inflation is under control before cutting the central bank's benchmark rate, which is at its highest level in 23 years.
JPMorgan CEO Jamie Dimon told investors in his annual letter to shareholders earlier this week that the bank is prepared for a higher interest rate scenario.
“We are prepared for a very wide range of interest rates, from 2% to 8% or even more, with equally wide economic outcomes: from strong economic growth with moderate inflation (in this case, higher interest rates would result from increased demand for capital) to a recession with inflation, that is, stagflation,” Dimon wrote.
From the point of view of the economy, “the worst scenario would be stagflation, which would not only bring higher interest rates but also higher credit losses, lower business volumes and more difficult markets,” he added.
The preparation Dimon highlighted could provide good news for JPMorgan investors. The bank may be in a better position than its peers when it comes to deposit costs, some analysts say.
JPMorgan “is taking a more conservative stance on near-term deposit price revision expectations,” Bank of America analysts wrote, explaining that while other banks expect deposit costs to decline after Federal Reserve begins cutting rates, JPMorgan “sees competition for retail deposits.” , along with a continued shift in mix, which could put upward pressure on deposit costs.”
JPM shares fell 0.9% on Wednesday to close at $195.47 amid a broader slowdown in U.S. stocks. The stock has gained about 50% in the last 12 months.
