![] A view of the exterior of the JP Morgan Chase & Co. corporate headquarters in New York City May 20, 2015. REUTERS/Mike Segar/File Photo](https://www.biznob.com/wp-content/uploads/2023/04/JP_800x500.jpeg)
On Monday, executives told investors that JPMorgan Chase & Co. (JPM.N) would earn $3 billion more in interest payments from its failing First Republic Bank takeover this year.
After buying First Republic, which was liquidated by authorities last month, the largest U.S. lender anticipates its net interest income to climb to $84 billion from higher interest payments in 2023, up from $81 billion.
The deal’s integration costs will add $3.5 billion to its expenses this year, up from $81 billion. The Wall Street giant is merging the regional lender, which will take 12 months.
JPMorgan is hopeful. Due to customer deposits seeking safety in larger institutions, it was one of the major benefactors of the banking crisis.
First Republic was the third U.S. regional lender to fail since March, shaking financial stocks, raising crisis fears, and pressuring mid-sized banks.
As rising interest rates devalued debt portfolios and commercial real estate loans, bank failures revealed balance sheet weaknesses.
“We cannot ignore that there are plenty of challenges at this time and sources of uncertainty,” said JP Morgan President and Chief Operating Officer Daniel Pinto.
Pinto noted that consumers are eroding their savings buffers, interest rates are rising, and inflation is persistent, despite the global and U.S. economies doing well.
ECONOMISTS WARN THAT a U.S. default could cause a market sell-off, higher borrowing prices, and a worldwide economic disaster comparable to the 2008 crash.
Pinto predicts investment banking and trading revenues to fall 15% in the second quarter and market volatility to rise as central banks wind down their monetary tightening cycles.
JPMorgan lost 0.7% to $138.14 on Monday.
“High-grade bond deals are slowly coming back,” global investment banking and corporate banking co-head Vis Raghavan said.
Last week’s investment-grade corporate bond deals, including Pfizer (PFE.N) and Charles Schwab (SCHW.N), showed that executives expect rates to rise this year and prefer borrowing sooner rather than later.
JPMorgan also maintained its 17% return on tangible common equity objective, which assesses how well a bank uses shareholder money to make a profit.
JPMorgan’s consumer banking CEO Jennifer Roberts said the bank would expand its branches slightly. The first bank with locations in all 48 contiguous U.S. states, it serves approximately 80 million individuals and 5.7 million small businesses.
Mike Mayo of Wells Fargo analysts said the bank’s presentation matches the “Goliath is winning” theme.
“The slides reflect benefits of scale given its aim and ability to generate superior ROTCE on one of the highest capital levels among big banks,” the brokerage wrote.
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