JP Morgan Chase & Co. saw its stock slump after warning on interest income.
JPM – Daily Chart
JPM stock saw its largest one-day drop since 2020 and with the uptrend channel in place it could be an important high. Support is below at the $191.03 level.
President and COO of the bank Daniel Pinto said forecasts for net interest income (NII), the difference between what the bank makes on loans and pays out on deposits, were too optimistic.
“NII expectations are a bit too high,” Pinto told investors. “Next year is going to be a bit more challenging.” He added that expenses could also increase over the next year.
JPMorgan had forecast its NII would rise to $91 billion this year as interest rates remained elevated. However, weakness in the economy and slower inflation is set to see income slow.
The commentary from management on too much NII optimism rattled the banking sector and rival banks will also see the same problems.
JPMorgan’s total investment banking fees could rise by up to 15% in the third quarter, Pinto added. The bank’s profit rose to a record in Q2, boosted by a 46% jump in investment banking revenue. Other investment banks, such as Citigroup and Wells Fargo, also reported strong gains in investment banking.
