Daniel Pinto, president and chief operating officer of JPMorgan Chase, speaks during the Semafor 2024 World Economy Summit in Washington, DC, on April 18, 2024.

Saul Loeb | AFP | Getty Images

JPMorgan Chase shares fell 7% Tuesday after the bank’s president told analysts that expectations for net interest income and expenses in 2025 were too optimistic.

While the bank expects to be in the “ballpark” of the 2024 target for NII of about $91.5 billion, the current estimate for 2025 of about $90 billion “is not very reasonable” because the Federal Reserve is cutting interest rates, JPMorgan president Daniel Pinto said at financial conference.

“I think that that number will be lower,” Pinto said. He declined to give a specific figure.

The stock move was the New York-based bank’s worst drop since June 2020, according to FactSet. JPMorgan, the biggest U.S. bank by assets, has been a winner among lenders in recent years, benefiting from better-than-expected growth in NII as the bank gathered more deposits and made more loans than expected. But skittish investors are now concerned about the outlook for a bellwether banking stock.

NII, one of the main ways banks make money, is the difference in the cost of a bank’s deposits and what it earns by lending money or investing it in securities. When interest rates decline, new loans made by the bank and new bonds it purchases will yield less.

Falling rates can help banks in the sense that customers will slow the rotation out of checking accounts and into higher-yielding instruments like CDs or money market funds. But they also make new assets lower yielding, which complicates the picture.

“Clearly, as rates go lower, you have less pressure on repricing of deposits,” Pinto said. “But as you know, we are quite asset sensitive.”

When it comes to expenses, the analyst estimate for next year of roughly $94 billion “is also a bit too optimistic” because of lingering inflation and new investments the firm is making, Pinto said.

“There are a bunch of components that tell us that probably the number on expenses will be a bit higher than what is expected at the moment,” Pinto said.



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