JPMorgan Chase Earnings Seen Jumping on Higher Net Interest Margins

Net interest income at America’s largest bank is expected to surge almost 37%, outperforming peer banks

By

Published April 12, 2023

JPMorgan Chase Headquarters, NYC — Getty Images

JPMorgan Chase (JPM), the largest U.S. bank by assets, is expected to report its fourth consecutive quarter of double-digit interest income growth on Friday, outperforming peers on higher net interest margins.

Key Takeaways

Analysts estimate EPS of $3.43, up 30% from the same quarter last year.
Revenue is projected to rise 17% to $37 billion.
Net interest income is projected to surge 36.5% to $19.06 billion, resulting in a net interest margin of 2.40%.

Earnings per share (EPS) likely rose 30% year-over-year to $3.43, driven by a 36.5% surge in net interest income (NII) to $19.1 billion. Within its consumer and community banking division—the bank's largest source of revenue—NII is projected to surge 45% to $12.1 billion. The company's net interest margin, a key profitability metric for banks, is expected to rise to 2.4% from 1.67% in the same quarter last year. The company will report earnings before markets open Friday, April 12.

JPMorgan Chase will likely stand out as a bright spot in a struggling banking sector reeling from the collapse of Silicon Valley Bank and Signature Bank last month, and the forced takeover of Credit Suisse. Depositors have flocked to cash, with total assets in money market funds hitting a record $5.25 trillion in early April. Commercial bank deposits have suffered, falling $65 billion in the week ending March 29, marking the tenth consecutive weekly decline.

Earnings expectations for the banking sector as a whole have also deteriorated. The six largest U.S. banks are expected to post an average decline in EPS of 10%, with Goldman Sachs's earnings projected to fall by a fifth.

Despite this, net interest margins are expected to rise throughout the industry driven by higher interest rates set by the Federal Reserve. When rates rise, banks earn more money on loans than they pay out to depositors, as borrowers are charged higher interest rates in exchange for bank loans. The six largest U.S. banks are expected to report a 30% increase in net interest income for the latest quarter.

JPMorgan Chase Key Metrics
	Estimate for Q1 FY 2023	Q1 FY 2022	Q1 FY 2021
Earnings Per Share ($)	3.43	2.64	4.51
Revenue ($M)	36,970	31,590	33,119
Net Interest Margin (%)	2.40	1.67	1.69

Shares of JPMorgan Chase have slightly outperformed the broader banking sector so far this year. They’re down roughly 4% year-to-date, compared to a 6% decline for the S&P 500 Financial Sector and a 19% decline for the KBW Bank Index (KBWB), a proxy for the performance of the banking industry.

JPM, KBW Bank Index, S&P 500 Financial Sector YTD Return — YCharts

Article Sources

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Investment Company Institute. "Money Market Fund Assets."
Federal Reserve. "Assets and Liabilities of Commercial Banks in the United States - H.8."
Reuters. "Wall Street Bank Earnings Under Pressure After Crisis."

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