ZACKS·2026-01-22 15:56Core Insights - JPMorgan expects net interest income (NII) to reach approximately $103 billion in 2026, up from $95.9 billion in 2025, despite a lower interest rate environment [1][8] - The NII forecast is contingent on market conditions and assumes two Federal Reserve rate cuts, with a target upper bound for fed funds near 3.25% [5] NII Breakdown - The projected NII for 2026, excluding Markets, is around $95 billion, indicating that Markets NII is expected to contribute approximately $8 billion, which is subject to variability [2][8] - Factors influencing NII include a projected decline in interest on reserve balances by about 92 basis points year-over-year and deposit margin compression [5] Consumer and Business Resilience - JPMorgan's CFO noted that consumers and small businesses are showing resilience, with no signs of deterioration across income groups [6] - In 2025, there was a notable increase in loan demand, particularly in Wholesale loans (up 17% year-over-year) and credit card loans (up 6%) [6] Strategic Developments - On January 7, JPMorgan signed an agreement to become the new issuer of the Apple Card, which has around $20 billion in receivables, although this transition is not expected to significantly impact NII in the current year [7] - A proposed cap on credit card interest rates at 10% could potentially pressure NII [7][9] Market Comparisons - Bank of America anticipates a 5-7% increase in NII for 2026, following a 7.2% growth in 2025, benefiting from a supportive rate environment and technology investments [11] - Citigroup projects a 5-6% growth in NII for 2026, after an 11% increase in 2025, supported by a stable rate environment [12] Valuation and Earnings Estimates - JPMorgan shares have increased by 1.8% over the past six months, trading at a price-to-tangible book (P/TB) ratio of 2.98X, which is below the industry average [13][15] - The Zacks Consensus Estimate predicts a 4.5% rise in JPMorgan's earnings for 2026, with a 9.1% growth expected in 2027 [16]