Big US Banks Prepare for Zero Interest Rates

Big US Banks Prepare for Zero Interest Rates

$JPM, $C, $WFC

JP Morgan Chase & Co. (NYSE:JPM) CEO Jamie Dimon reportedly said that he doubts the wave of negative interest rates in countries around the world will reach the US, he is nevertheless preparing his bank for that possibility

“I do not think we will have Zero rates in the US, but we are thinking about how to be prepared for it, just in the normal course of risk management,” Mr. Dimon said Tuesday at a conference in New York.

“Obviously, you have got to worry about the long term effect of those interest rates,” he said. “But it’s hard. There are businesses it doesn’t affect at all. And there are businesses where it just sucks into your margin and there’s very little you can do about it.”

Meanwhile, JPMorgan also lowered its outlook for Y 2019 net interest income by about $500-M Tuesday, following similar moves by rival big banks Wells Fargo & Co (NYSE:WFC) and Citigroup Inc.(NYSE:C)

“Our net interest income will be a little bit lower than we told you last time,” Mr. Dimon said at Barclays’ Financial Services Conference in New York. “I think we told you $57.5-B and I am closer to $57-B for this year.”

That is a lower forecast for full-year net interest income than the bank gave in mid-July and it shows that banks with large pools of customer deposits are struggling to make as much money amid lower interest rates and an inverted yield curve.

Monday Citi and Wells Fargo tempered their outlooks for net interest income.

Citi now expects net interest income to be up 3% to 4% for the year, compared with prior guidance of 4% growth.

Wells Fargo lowered its projections for the 2nd time this year. The bank’s CFO said it expects net interest income to fall 6% in Y 2019, compared with 5% stated previously.

CEO Dimon also said JPMorgan Chase expects Q-3 trading revenues to be 10% lower than in Q-2, while fees from mergers and acquisitions will likely be flat in comparison with the prior Quarter.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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