JPMorgan Chase's net interest income guidance is tempered, resulting in a 7% decline in shares.

• On Tuesday, JPMorgan Chase's shares dropped by 7% after its president admitted that the bank's forecast for net interest income was overly optimistic.
• According to JPMorgan president Daniel Pinto, the current estimate for NII, a key source of bank revenue, at $89.5 billion is overestimated due to anticipated interest rate developments.
• Since June 2020, the New York-based bank's worst drop was recorded in the move.

On Tuesday, the bank's president informed analysts that their expectations for net interest income and expenses in 2025 were overly optimistic, resulting in a 7% decline in shares.

JPMorgan president Daniel Pinto stated at a financial conference that the bank's current estimate for 2025 of about $90 billion for NII is not reasonable due to the Federal Reserve's decision to cut interest rates.

Pinto stated that the number would be lower, but he did not provide a specific figure.

Banks generate income through NII, which is the gap between the cost of their deposits and the earnings from lending or investing in securities. When interest rates decrease, the bank's new loans and bond purchases will yield less.

Lowering interest rates can encourage customers to keep their money in cash, but it also reduces the yield on new assets like CDs and money market funds.

"As rates decrease, there is less pressure to reprice deposits, as Pinto stated. However, we are highly asset sensitive."

Since June 2020, the New York-based bank's worst drop was recorded in the move.

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