Background
What drove 2023’s record net income at JPMorgan Chase & Co., and what are the lessons for 2024’s broader market prospects? Why is JPMorgan expanding its workforce as Citigroup Inc. cuts 20,000 staff?
JPMorgan’s profit was driven by a surprise forecast that unprecedented net interest income (NII) may withstand Federal Reserve rate cuts this year, according to an AI-powered summary of its earnings call. Technology investments are generating more business and driving the company’s hiring plans. Meanwhile, Citi said its tech spending had boosted productivity, allowing for job cuts.
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The issue
NII of $90 billion ($88 billion excluding markets) in 2024 is higher than both 2023’s total and the consensus forecast for this year. The bank assumes Fed rate cuts will support loan growth and markets earnings while reducing pressure to pay higher deposit rates. That may help offset lower returns on assets, including loans and investments.
The momentum of NII forecasts was strongly upward even before JPMorgan’s higher guidance, with the potential for further revisions to the consensus. Capital Allocation shows the bank plans $2 billion of buybacks a quarter, and M&A indicates the bank is uncertain over capital markets normalization.
JPMorgan will hire bankers domestically and internationally because of new clients and new loans, especially as it accelerates its innovation economy strategy. Scrolling down to the final item in the 35-point earnings call summary shows new products, features and platforms driving growth and volume-related technology expenses.
Meanwhile, the three drivers of Citigroup’s job cuts are reduction of management layers, eliminating stranded costs after exiting markets and realizing productivity savings from technology investment.
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Tracking
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