JPMorgan Chase (JPM) raised expectations for a major revenue source in 2024, partly thanks to less expected Federal Reserve rate cuts.
The country’s largest bank now expects to generate $91 billion in net interest income this year, excluding trading income, up $2 billion from what it expected in April.
Net interest income measures the difference between what banks earn on their assets and what they pay out in deposits.
Higher interest rates allow big banks to charge more for their loans, which can increase their net interest income. And JPMorgan now expects just two rate cuts this year, down from the six previously thought would happen.
Shares of JPMorgan rose 1% in premarket trading Monday, hitting new highs.
The bank announced the net interest income at the start of its annual investor day in Manhattan, where followers of the bank gathered to hear from CEO Jamie Dimon and his management team.
The executives will provide updates and forecasts for all key business areas of the bank. Dimon will also speak, and investors will listen to any discussion of succession or how long the 68-year-old plans to stay in the top job.
Net interest income has been a major focus for many bank investors over the past year. Smaller banks have struggled to strengthen this measure over the past year as interest rates and deposit costs soared.
There were some signs in the first quarter that the Fed’s high interest rates were starting to dampen growth, even at JPMorgan and other major lenders.
JPMorgan’s NII fell 4% between the fourth quarter and the first quarter, the first consecutive decline in nearly three years.
Depositors are looking for higher returns, as they have done at smaller banks, and are moving their money to products like certificates of deposit, which require JPMorgan to pay higher interest rates.
When JPMorgan raised its expectations on Monday, it attributed the change to fewer rate cuts and “better than expected repricing and migration performance.”
The bank also said in documents released early in the day that it is increasing its spending budget by $1 billion to $92 billion, reflecting a contribution to its charitable foundation.
That would mean JPMorgan’s expenses would increase by $6.3 billion compared to last year.
JPMorgan also increased its technology budget to $17 billion, up $1.7 billion (24.5%) from last year.
The bank reiterated its plans to expand the number of branches by 500 over the next three years and said it will launch Private Client under the JPMorgan brand, a concierge service aimed at targeting affluent customers.
The launch is accompanied by the introduction of branches under the JPMorgan brand.
David Hollerith is a senior reporter for Yahoo Finance, covering banking, cryptocurrency and other areas of finance.
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