JPMorgan Chase, the biggest U.S. bank, said this year's net interest income will be lower than analysts expected as the economy shows signs of slippage.
The stock fell after the company said NII, a major revenue source, will be about $73 billion this year, below the $74.4 billion estimate. The forecast followed a record haul of $20.2 billion from net interest income in the fourth quarter.
"The U.S. economy currently remains strong with consumers still spending excess cash and businesses healthy," Chief Executive Jamie Dimon said in a statement Friday. "However, we still do not know the ultimate effect of the headwinds coming." The company also warned of a "modest deterioration" in its macroeconomic outlook.
The results at the biggest U.S. bank, as well as those of three of its biggest rivals also reporting Friday, offer a look into how US consumers and companies are faring through persistent inflation and higher borrowing costs. Dimon
Bank of America reported a 29% increase in fourth-quarter NII as it benefited from the Fed's series of interest-rate increases last year.
JPMorgan temporarily suspended share buybacks last year to quickly meet higher capital requirements while staying flexible to navigate a changing economic environment. Dimon said Friday that JPMorgan has the ability to resume buybacks this quarter "as we deem appropriate."
Investors are watching for any signs of cracks in the economy, including in how much lenders set aside for potentially soured loans. JPMorgan added $1.4 billion to its loan-loss reserves in the fourth quarter, more than analysts expected.
Shares of JPMorgan, up 4% this year through Thursday, had dropped 2.6% to $135.85 at 9:13 a.m. in early trading in New York.
The results included the impact of a $914 million gain on a sale of Visa shares, tempered by a loss on investment securities.
Noninterest expenses rose 6% to $19 billion, lower than what analysts were expecting. Costs have been a key focus for JPMorgan investors as the firm has been on a spending spree to build out technology offerings and stay ahead of competition. In a presentation Friday, JPMorgan said it expects about $81 billion in "adjusted expense" for 2023.
JPMorgan's traders pulled in $5.7 billion for the quarter, a 7% jump from a year earlier, with both equity and fixed-income trading revenue coming in below analysts' expectations. Marianne Lake, co-head of the firm's consumer and community bank, said at a conference in early December that trading revenue could rise about 10% based on results up to that point in the quarter.
