By David Benoit
The booming gains in lending profits at JPMorgan Chase and other banks may be ending.
Throughout 2023, the biggest bank in the country benefited from higher interest rates and had to continually increase its forecast for net-interest income, the amount of revenue it collects from loans minus what it pays for deposits and funds.
It earned a record $89.27 billion in net-interest income in 2023, up 34% from the prior year.
Friday, JPMorgan forecast lending profits would slide to $88 billion for 2024, minus its volatile markets business. Their forecast assumes 6 rate cuts in the new year, a decline in deposits and muted loan growth.
The forecast looked like a steeper decline when compared to the rate it was earning in the fourth quarter, CFO Jeremy Barnum said, calling for “meaningful sequential quarterly declines throughout 2024.”
Wells Fargo is also forecasting net-interest income will fall in 2024.
Of course, Barnum spent much of 2023 warning that the rate was unsustainable and was going to come down. It kept going up. And $88 billion would still be in line with recent goals the bank has set.
“As we turn to 2024, it shouldn’t be surprising that our outlook has us beginning to march down the path of normalizing our returns,” Barnum said.