Shares of JPMorgan Chase dropped by 5% on Tuesday after the bank’s president, Daniel Pinto, suggested that market expectations for the bank’s net interest income (NII) and expenses in 2025 were overly optimistic.
Speaking at a financial conference, Pinto indicated that while the bank expects to reach its 2024 NII target of $91.5 billion, the projected estimate of $90 billion for 2025 is likely unrealistic due to anticipated Federal Reserve rate cuts.
“I think that number will be lower,” Pinto remarked.
He declined to provide a revised figure. This cautious outlook, combined with concerns over future expenses, led to the sharp drop in JPMorgan’s stock, which at one point fell more than 7%, its worst decline since June 2020.
JPMorgan, the largest US bank by assets, has experienced significant growth in recent years, with stronger-than-expected NII supported by increased deposits and loans. However, investor concerns about declining interest rates and slowing US economic growth have raised uncertainties about the bank’s future earnings.
Net interest income, a key measure of a bank’s profitability, reflects the difference between what banks earn from loans and investments versus what they pay on deposits. As interest rates fall, new loans and bonds yield less, which may dampen the bank’s earnings. While declining rates can ease pressure on deposit costs, they also reduce returns from new assets.
Pinto also highlighted that estimates for the bank’s 2025 expenses—currently around $94 billion—are too optimistic, citing ongoing inflation and investments the firm is making.
“There are components that suggest expenses will be higher than expected,” he said.
Despite this tempered outlook, JPMorgan remains optimistic about some areas of its business. Pinto noted that third-quarter trading revenue is expected to remain flat or rise by 2%, with investment banking fees projected to grow by 15%. However, JPMorgan’s cautionary comments about future earnings echo similar concerns from other major banks, with Goldman Sachs recently projecting a 10% decline in third-quarter trading revenue.
