Investors don’t like what JP Morgan sees in 2025

When JP Morgan Chase speaks, everyone listens.

And on Tuesday, what the company had to say about the outlook in 2025 disappointed its fans and pushed the Dow lower.

Daniel Pinto, President and Chief Operating Officer of JP Morgan Chase (JPM) surprised attendees at an investor conference in New York by saying some estimates of Morgan’s earnings in 2025 were too high.

The key issue: The banking giant’s net interest income (NII) in 2025 is likely to be lower than they and the bank expected, he said.

The bank had estimated that NII in 2025 would reach $91 billion. Now faced with the prospect of lower interest rates, Pinto warned that the forecast for 2025 is “a bit too high”.

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Net interest income is the difference between what a bank pays depositors in interest and earns in interest on loans. It is basically the gross profit of a bank.

Daniel Pinto, chairman and chief operating officer of JPMorgan Chase & Co., disappointed investors with a cut in his profit guidance.

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JP Morgan makes fees for Dow Jones

The Federal Reserve is expected to cut its key policy rate by at least 0.25% from 5.25% to 5.5% to 5% to 5.25% at its September 17-18 meeting.

This would trigger a cycle of more interest rate cuts, which in turn would lead to smaller-than-expected increases in banks’ interest income.

JPMorgan shares closed at $205.56 on Tuesday, down $11.25, or 5.2%. The percentage loss was the biggest among the 30 stocks in the Dow Jones Industrial Average, which fell 93 points, or 0.2 percent, to 40,737.

The loss dropped nearly 74 points from the Dow. Goldman Sachs (GS) fell 4.4% to $467.13, down an additional 142 points from the blue-chip index.

Pinto’s announcement sent financial stocks lower overall. Financial Select Sector SPDR Fund (XLF) fell 1% to $44.49.

The S&P 500 and Nasdaq Composite were higher on the strength of tech stocks.

Banks defeated the Fed’s Basel III end game

However, the day was not a total loss for the banks.

The Federal Reserve has announced it has scaled back its plan to force the biggest banks to shore up the capital they need to hold to protect themselves against losses.

New growth is expected to be 9%. The Fed had originally proposed a 20% increase. Regulators around the world have been looking to banks to build more capital to protect the global financial system and guard against the need for taxpayer-backed bailouts.

The financial crisis of 2008-2009 and the failures of three major banks in 2023 shone a very bright light on the fragile financial condition of banks.

The banks, led by JPMorgan CEO Jamie Dimon, had fought the Fed over the rules and threatened to sue if the government enforced them.

They argued that the rules would make it harder to lend to customers and that the government had not provided enough evidence that the changes would actually help improve the resilience of the banking system.

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Jamie Dimon thinks annual meetings are frivolous

That news from the Fed might have cheered up Dimon, but the famed CEO had more to say. He hates annual shareholder meetings.

“Let’s call it what it is. It’s a frivolous waste of time. They’re being hijacked by special interest groups,” he said Tuesday at an event organized by the Council of Institutional Investors in Brooklyn, N.Y. Barrons covered the speech.

Dimon said shareholder meetings do not promote “serious conversations” about important company or societal issues.

He suggested that regulations that allow anyone with at least $2,000 in a public company to submit proposals for voting at annual meetings are outdated.

Those remarks drew murmurs from the audience, Barrons noted. CII is an organization that represents large shareholders, including public pensions, large unions, foundations and corporate pension funds.

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