Tags: jpmorgan | rates | profit | boost

JPMorgan: Higher Rates May Fuel $7 Billion Profit Boost

Image: JPMorgan: Higher Rates May Fuel $7 Billion Profit Boost
(Mohamed Ahmed Soliman | Dreamstime)

Tuesday, 27 February 2018 11:28 AM

JPMorgan Chase & Co.’s profit could increase $7 billion in coming years from rising U.S. interest rates and accelerating loan growth.

The bank boosted its outlook for medium-term pretax income to as much as $47 billion from about $40 billion in 2017, according to a presentation on the company’s website. The U.S. tax overhaul will boost return on tangible common equity up to 3 percentage points, the company said.

The more optimistic outlook “appears reasonably consistent with our forecast and entirely consistent with a franchise focused on investment and well positioned for profitable growth,” Credit Suisse Group AG analysts led by Susan Roth Katzke said in a note.

Along with rising interest rates, JPMorgan expects a large windfall from the Republican tax overhaul passed last year. While the bank said last month it would boost wages for some workers and expand branches in response to the tax cuts, much of the benefit will fall to shareholders through higher profits.

The changes appear to benefit the asset-management division the most, with the bank forecasting return on equity in that business of about 35 percent, up from 25 percent previously. Consumer banking ROE will jump to more than 25 percent from about 20 percent, according to the presentation.

Favorable Trends

“Expect favorable global macro and credit trends to benefit our operating performance,” JPMorgan said in the presentation, adding that it sees a low risk of a near-term recession.

More intense competition will mean some of the tax benefit will flow to customers as well, the bank said.

Non-interest expenses will rise to less than $62 billion in 2018 from $58.5 billion this year as the company increases spending on investments such as technology, which will get about $1.4 billion more, according to the forecast. The figure compared with the $61 billion projected by analysts at Credit Suisse.

Non-interest revenue will increase 7 percent in 2018, the bank said.

Shares of the company dropped 0.7 percent to $117.94 at 7:56 a.m. in early trading in New York.

© Copyright 2018 Bloomberg News. All rights reserved.

   
1Like our page
2Share
StreetTalk
JPMorgan Chase & Co.’s profit could increase $7 billion in coming years from rising U.S. interest rates and accelerating loan growth.
jpmorgan, rates, profit, boost
334
2018-28-27
Tuesday, 27 February 2018 11:28 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved