JPMorgan Chase stock was rising after the bank lifted its 2022 forecast for net interest income.
JPMorgan's (ticker: JPM) investor day, which began at 8 a.m. Eastern time, is the bank's chance to convince investors that it hasn't lost its "fastball," as one analyst said this month.
So far so good. Ahead of the meeting, the bank affirmed its target for return on tangible capital equity — a key gauge of profitability — at 17%, and it said it may achieve that mark this year. It also expects net interest income excluding markets of $56 billion in 2022 — it previously expected more than $53 billion — while keeping its forecast for costs at $77 billion.
JPMorgan's reputation for outshining other banks has been knocked this year. The biggest U.S. lender by market value earlier had to lift its estimates for expenses this year and said that it expects some deterioration in capital levels.
Wells Fargo analyst Mike Mayo wrote last week that the challenge for JPMorgan Chief Executive Jamie Dimon was convincing investors that the largest U.S. bank by market value will remain more profitable than its peers.
Investors were pleased to see a positive outlook from the bank as its stock — like many companies this year — has struggled amid recession worries and recent market volatility. JPMorgan shares have fallen 26% this year, lagging the SPDR S&P Bank ETF (KBE), which is down by 16%.
While JPMorgan's stock performed well during the pandemic, benefitting from surges in trading activity and deal-making, the post-pandemic world has been more difficult to navigate. The Federal Reserve's plans to lift interest rates should have been a boon for the banking sector, but instead investors are worried that the Fed will instead tip the economy into a recession.
In slides ahead of Monday's presentation, the bank said its credit outlook remains "positive." It noted that last year net charge-offs were at "historically low levels" and were expected to return to pre-pandemic levels "over time," implying that the bank isn't too worried about recent volatility. The bank added that wholesale and consumer balance sheets are "strong," meaning credit normalization isn't expected this year.
Expenses will be one area investors will be focusing on Monday as the bank's spending has outpaced peers, reflecting both higher compensation costs seen across the industry and the bank's own spending on technology. In an annual investor letter released in April, Dimon defended the bank's recent spending — including investments — noting it was necessary for maintaining its competitive edge.
The stock rose 1.5% in premarket trading Monday. Futures for the Dow Jones Industrial Average and S&P 500 were both up 0.7%.