Uncertainty persists for banks despite rate cut, JPMorgan warns of potential challenges ahead.

From CNBC: 2024-10-10 12:51:15

Federal Reserve Chairman Jerome Powell held a press conference after a rate cut, signaling more cuts to come. Banks are hopeful, but concerns over inflation may alter plans. JPMorgan Chase kicks off bank earnings amid uncertainty. Large banks may see a 4% drop in net interest income due to tepid loan growth and deposit costs rising.

Timing and impact of Fed’s easing cycle on banks remains uncertain. Ideally, net interest margins will increase, but assets may reprice faster than deposits, impacting margins. JPMorgan’s warning on NII expectations hints at challenges ahead. Lower rates may benefit Wall Street operations with increased deal volumes for big banks.

Regional banks may benefit more from falling rates initially than large banks. Morgan Stanley upgraded US Bank and Zions, downgraded JPMorgan. Expectations for NII are being lowered by Bank of America and Wells Fargo due to potential loan losses in 2025. Dynamics are hard to predict, even for bank management teams.



Read more at CNBC:: Banks aren’t in the clear just yet