JP Morgan Chase
The stock is rising after the bank lifted its 2022 net interest income forecast.
JPMorgan’s (Ticker: JPM) Investors’ Day, which started at 8 a.m. earlier in the day, is an opportunity for the bank to convince investors that it has not lost its “fastball,” according to one analyst this month.
So far so good. Prior to the meeting, the bank reaffirmed its intention to return to 17% tangible capital equity – a key measure of profit – and said it could achieve this mark this year. It also expects net interest income in 2022, in addition to the $ 56 billion market – it previously expected more than $ 53 billion – where the cost forecast was set at $ 77 billion.
JPMorgan’s reputation for outperforming other banks has plummeted this year. The largest U.S. lender in terms of market value had to raise its estimates for this year’s spending, saying it expects a slight decline in capital levels.
Wells Fargo analyst Mike Mayo wrote last week that the challenge for JPMorgan CEO Jamie Dimon is to convince investors that the largest US bank in terms of market value will outperform its peers.
Investors were pleased to see a positive outlook from the bank as its stocks – like many companies this year – have struggled with recessionary concerns and recent market volatility. JPMorgan shares fell 26% this year, lagging behind
SPDR S&P Bank ETF
(KBE), down 16%.
Although JPMorgan’s stock has performed well during the epidemic, benefiting from an increase in trading activity and contract building, the epidemic has become more difficult to navigate in the afterlife. The Federal Reserve’s plan to raise interest rates should have been a boon for the banking sector, but investors are worried that the Fed will lead the economy into a recession.
In a slide before Monday’s presentation, the bank said its credit outlook remained “positive.” It noted that last year’s net charge-offs were “historically low” and expected to “return to pre-epidemic levels over time”, indicating that the bank was not too concerned about the recent turmoil. The bank added that the wholesale and consumer balance sheets are “strong”, meaning credit normalization is not expected this year.
As the bank’s spending surpasses its peers, investors will focus on one area on Monday, which reflects both the higher compensation costs seen across the industry and the bank’s own costs in technology. In an annual investor letter published in April, Daemon defended the bank’s recent spending – including investments – stating that it was necessary to maintain its competitive edge.
The stock rose 1.5% in premarket trading on Monday. For the future
Dow Jones Industrial Average
Both increased 0.7%.