JPMorgan says interest income could rise this year even as uncertainty persists

[NEW YORK] JPMorgan Chase could earn more from interest payments this year as consumers and businesses remain resilient despite economic uncertainty, it said on Monday (May 19).

Net interest income (NII) – the difference between what the bank pays on deposits and earns from interest payments – could rise by US$1 billion this year, chief financial officer Jeremy Barnum told investors.

Still, it was too early to change the full-year NII outlook of US$94.5 billion, Barnum said. The bank has repeatedly warned that it was over-earning on NII.

“The evolving tariff environment, combined with the preexisting geopolitical tensions, adds significant uncertainty into the economic outlook,” Barnum told shareholders and analysts gathered at the bank’s New York headquarters for an annual presentation.

“The combination of inflation and large fiscal deficits may constrain the available policy responses in ways that further increase the risk.”

The bank estimated its net charge-off rate, or the percentage of credit card debt that will not be repaid, to be between 3.6 per cent and 3.9 per cent for 2026.

That is higher than the 3.6 per cent net charge-off rate the bank is expecting for 2025.

“We see both consumers and small businesses remaining financially healthy and resilient,” said Marianne Lake, CEO of consumer and community banking. “However, what has definitely worsened is consumer confidence and small business sentiment.”

Although trade negotiations have helped ease some jitters, corporate executives remain wary about the economic outlook, with JPMorgan CEO Jamie Dimon warning last week that a recession could not be ruled out.

Barnum said that the biggest US bank is open to acquisitions, or “inorganic growth,” at a time when it is flush with cash, but will be “appropriately cautious” with any acquisitions because of the challenges of integrating businesses.

Since purchasing assets of failed lender First Republic Bank in 2023, JPMorgan has been relatively quiet on acquisitions.

The bank’s capital was “impressive,” Piper Sandler analyst Scott Siefers wrote in a note. It has “significant flexibility for both defensive and offensive actions,” he said.

Separately, the lender also emphasised the role of artificial intelligence in boosting efficiency.

“The operations team is at the tip of the spear on using and leveraging new AI tools and capabilities,” Lake said. “And based upon what we know today, we expect headcount will trend down by about 10 per cent over the next five years or so.”

Large financial institutions are finding ways to use AI to cut costs and increase productivity, which could dramatically reshape their workforces. REUTERS