JPMorgan predicts 2024 revenue boost as rate expectations shift

JPMorgan Chase (JPM) boosted expectations for a key revenue source in 2024 due partly to fewer rate cuts expected from the Federal Reserve.

The nation’s largest bank now expects to make $91 billion in net interest income this year excluding trading revenue, a $2 billion bump compared to what it anticipated in April.

Net interest income measures the difference between what banks earn from their assets and pay out in deposits.

Higher interest rates allow big banks to charge more for their loans, which can boost their net interest income. And JPMorgan now expects just two rate cuts this year, down from the six it previously assumed would happen.

JPMorgan’s stock rose 1% in premarket trading Monday, cresting fresh highs.

The bank made the net interest income disclosure at the start of its annual investor day in Manhattan, where followers of the bank have gathered to hear from CEO Jamie Dimon and his executive team.

The executives will provide updates and forecasts for all of the bank’s key business units. Dimon will also speak, and investors will be listening for any discussion of succession or how much longer the 68-year-old plans to stay in the top job.

Net interest income is a key focus for many bank investors over the last year. Smaller banks have struggled to boost this measure over the last year as interest rates and deposit costs soared.

There were some signs in the first quarter that high rates from the Fed were starting to weigh on growth even at JPMorgan and other large lenders.

JPMorgan’s NII fell 4% between the fourth quarter and the first quarter, its first sequential drop in nearly three years.

Depositors are seeking out higher yields, as they have at smaller banks, and moving their money into products such as certificates of deposits where JPMorgan has to pay a higher rate.

On Monday, as JPMorgan boosted its guidance, it attributed the change to fewer rate cuts and “better-than-expected reprice and migration performance.”

The bank also said in documents released at the start of the day that it is raising its expense budget by $1 billion to $92 billion, reflecting a contribution to its charity foundation.

That would mean JPMorgan’s expenses would rise by $6.3 billion compared with last year.

JPMorgan also raised its technology budget to $17 billion, a $1.7 billion (24.5%) rise from last year.

The bank reiterated its plans to expand its number of branches by 500 over the next three years and said it is launching JPMorgan-branded Private Client, a concierge service meant to target mass affluent customers.

Story continues

The launch comes with the roll out of JPMorgan-branded branches.

David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.

Click here for in-depth analysis of the latest stock market news and events moving stock prices.

Read the latest financial and business news from Yahoo Finance