JPMorgan Chase & Co. will gain an even bigger benefit from rising interest rates because of its purchase of First Republic Bank.
The biggest US bank raised its guidance for net interest income this year to $84 billion, excluding its trading business, up from a previous forecast of $81 billion, according to a presentation on its website released ahead of its Investor Day Monday.
The lender said several “sources of uncertainty remain,” including the Federal Reserve’s plans and how consumers react to higher borrowing costs.
JPMorgan bought First Republic Bank earlier this month after it became the second-largest bank failure in US history and the fourth regional-bank collapse this year. JPMorgan Chief Executive Officer Jamie Dimon, the only major bank CEO from the financial crisis still in command, said last week that “we need to finish the bank crisis” and regulators should “not be surprised constantly.”
Read More: Dimon Says JPMorgan Is Unlikely to Buy More Struggling Banks
The largest banks have been mostly immune to the problems plaguing their smaller rivals, with JPMorgan reporting a surprise jump in deposits in the first quarter as customers sought safety. Shares of the biggest US bank were up 3.8% this year through Friday, while the KBW Regional Banking Index was down 28%. The bank’s stock rose 0.6% in early New York trading Monday.
JPMorgan said in its presentation that the outlook for 2023 expenses remained unchanged at roughly $81 billion, excluding the costs tied to the First Republic acquisition. It said those would total about $3.5 billion.
“Credit remains benign, but we expect continued normalization throughout the year,” the New York-based bank said in the presentation. The lender has set aside reserves based on expectations for peak unemployment of 5.8% in late 2024.
(Updates with expense forecast in fifth paragraph.)
