JPMorgan Chase & Co., the biggest U.S. bank, said this year’s net interest income will be lower than analysts expected as the economy shows signs of slippage.

The stock fell after the company said NII, a major revenue source, will be about US$73 billion this year, below the US$74.4 billion estimate. The forecast followed a record haul of US$20.2 billion from net interest income in the fourth quarter.   

“The U.S. economy currently remains strong with consumers still spending excess cash and businesses healthy,” Chief Executive Officer Jamie Dimon said in a statement Friday. “However, we still do not know the ultimate effect of the headwinds coming.” The company also warned of a “modest deterioration” in its macroeconomic outlook.

The results at the biggest U.S. bank, as well as those of three of its largest rivals also reporting Friday, offer a look into how U.S. consumers and companies are faring through persistent inflation and higher borrowing costs. Dimon said earlier in the week that the Federal Reserve may ultimately need to raise interest rates beyond what’s currently expected, but he’s in favor of a pause to see the full impact of last year’s increases. 

Bank of America Corp. reported a 29 per cent increase in fourth-quarter NII — the difference between what it earns on loans and what it pays depositors — as it benefited from the Fed’s series of interest-rate increases last year.

JPMorgan temporarily suspended share buybacks last year to quickly meet higher capital requirements while staying flexible to navigate a changing economic environment. Chief Financial Officer Jeremy Barnum said on a conference call that the New York-based company expects to resume share repurchases this quarter, adding that about US$12 billion would be a “good number to use” in estimating the level for this year.

Investors are watching for any signs of cracks in the economy, including in how much lenders set aside for potentially soured loans. JPMorgan added US$1.4 billion to its loan-loss reserves in the fourth quarter, more than analysts expected.

Shares of JPMorgan, up 2.1 per cent this year, dropped 1.9 per cent to US$136.86 at 9:38 a.m. in New York. 

The results included the impact of a US$914 million gain on a sale of Visa Inc. shares, tempered by a loss on investment securities.

Non-interest expenses rose 6 per cent to US$19 billion, lower than what analysts were expecting. Costs have been a key focus for JPMorgan investors as the firm has been on a spending spree to build out technology offerings and stay ahead of competition. In a presentation Friday, JPMorgan said it expects about US$81 billion in “adjusted expense” for 2023.

JPMorgan’s traders pulled in US$5.7 billion for the quarter, a 7 per cent jump from a year earlier, with both equity and fixed-income trading revenue coming in below analysts’ expectations. Marianne Lake, co-head of the firm’s consumer and community bank, said at a conference in early December that trading revenue could rise about 10 per cent based on results up to that point in the quarter.