JPMorgan Chase lays plans to build on last year's success

Michael Nagle/Bloomberg

After JPMorgan Chase's most-profitable year in its history, the largest bank in the U.S. is still projecting good times to roll in 2024, if perhaps a little more slowly.

The $3.9-trillion company is banking on its ability to balance loan revenue and deposit costs in the coming year, announcing that it expects to bring in net interest income of $90 billion. CEO Jamie Dimon said in a prepared statement Friday morning that the economy is resilient, but the bank must "be prepared for any environment." He said the bank is paying attention to factors like geopolitical tension and large amounts of government deficit spending.

Still, even as Americans began to spend through the stimulus and savings they amassed during the pandemic, JPMorgan CFO Jeremy Barnum said he isn't too concerned about the state of the consumer. Barnum added that the bank believes that the relevant metrics to gauge consumer health have normalized, the labor market is strong and the economy is on its way to a "soft landing."

"We see a lot of this talk about the total amount of credit card debt, and everyone wants to see a problem there," Barnum said on a call with journalists. "We're not invested in not seeing a problem if there are actually problems, but the reality is, we just aren't seeing them yet. … It's boring to keep saying the same thing, but right now we're seeing normalization rather than deterioration."

Although charge-offs increased by more than double from the previous year, totaling $6.2 billion for the year, Barnum said the bank expected delinquent debt to rise as conditions stabilized. JPMorgan is expecting charge-offs to keep below 3.5% in 2024.

Preparing for the coming year, JPMorgan's plans stand in contrast to other banks that have not had as strong a year. The bank is ramping up investments in hiring, along with technology, branches and marketing, especially in its consumer and community banking line of business as it builds and staffs new branches. The bank projects total expenses of $90 billion in 2024, up from a reported $87.2 billion from this past year. Meanwhile Citi announced Friday that it would cut 20,000 jobs in the next year and severance charges added to Wells Fargo's expenses.

"Some of our investments are designed to produce short-term payoffs and some of them are much longer term and some of them are just table stakes," Barnum said on the earnings call. "But we actually see quite a bit of evidence of current payoffs in our current results in the CCB investment … we're very happy to be producing very good current returns and growth while investing for the future."

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JPMorgan saw net interest income — the difference between the bank's earnings on loans and its costs on deposits — rise throughout 2023, pulling in $24.2 billion in its fourth quarter, up 19% sequentially.

Research analysts at Piper Sandler wrote in a note that the pros of JPMorgan's net interest income guidance, which beat the analyst consensus, outweigh the cons of the higher-than-anticipated expense projection.

Dimon also cautioned in the earnings release that Basel III endgame, the proposed regulations to increase capital requirements, could "cause serious harm to consumers, businesses and markets." Major banks and their lobbyists in Washington have been vocal about their objections to the potential regulation, and Semafor reported earlier this week that the industry was preparing to take legal action against regulators if it goes into effect as is.

"We're not going to get that specific about potential litigation strategy at this point," Barnum said on the call with journalists. "Obviously, suing your regulators is never your preferred option, but it can't be taken off the table when you're talking about something serious."