Jamie Diman, CEO of JPMorgan Chase, speaks before the New York Economic Club in New York on January 16, 2019.
Carl Allegri Reuters
On Monday, JPMorgan Chase turned the course on the recommendations it gave in January, saying the bank could achieve a key goal this year.
The lender said the return on tangible fixed capital of 17% “remains our goal and can be achieved in 2022,” the presentation said. It’s a transition from earlier this year when CFO Jeremy Barnum warned that headwinds, including rising costs, would cause the bank to fail to reach its target in the next one to two years.
“There is a very good chance this year” to reach the goal and exceed it next year, when there will be a “good” credit environment, said to investors on Monday CEO Jamie Diamond, speaking in his introductory remarks before the investor’s day meeting at the bank.
Shares of JPMorgan rose 1.7% in pre-market trading.
Although spending targets for 2022 have not changed to about $ 77 billion, rising interest rate expectations as the Federal Reserve fights inflation could be a boost. The bank said net interest income in 2022 could exceed $ 56 billion, well above the $ 50 billion estimate given in January.
JPMorgan is holding its first Investor Day since 2020 in response to questions from investors and analysts about the bank’s strategy and investments. Shares of the bank began to fall in January after it discovered an unexpected jump in spending in the fourth quarter, and management said it was unlikely to reach the 17% yield target.
Analysts wanted more information on the types of investment in technology, staffing and acquisitions in anticipation of spending growth of 8% this year to $ 77 billion.
“For us, the question is clear: front-loading costs for less certain added benefits,” veteran bank analyst Mike Mayo wrote in a January note in which he abbreviated his recommendation on JPMorgan shares.
Since then, JPMorgan executives have realized they were wrong not to give more details about their business plans, which include about $ 15 billion in investment for 2022 alone, according to someone who knows the bank.
In recent years, the largest U.S. bank in terms of assets has actively invested in technology and staff to compete with both traditional and new players in the field of technology. This helped him win market share in business lines from credit cards to deposits to trading on Wall Street.
“It seems pretty obvious that the market wants to hear more from us, and we want to tell a story and spend some time on more information,” Barnum said during a February conference.
On Monday, in addition to Diman and its CFO, presentations are expected to be made by heads of divisions including Daniel Pinto, Marianne Lake and Jennifer Piepsac.
Shares of JPMorgan showed the worst performance among the six largest US banks, fell about 26% this year to Monday and exceeded the fall of the KBW Bank index by 19%.
This story is evolving. Please check for updates.