(Bloomberg) -- JPMorgan Chase & Co. raised its forecast for this year’s net interest income, its biggest source of revenue, on expectations the Federal Reserve will lower interest rates at a slower pace than the bank previously predicted.

The company now expects to generate $91 billion of NII in 2024, compared with the roughly $90 billion haul forecast when it reported first-quarter earnings last month. JPMorgan said it’s now predicting just two rate cuts this year, down from six when it published guidance in January. 

Shares of the company rose 0.8% at 7:28 a.m. in early New York trading, after the firm published the new guidance on its website ahead of its investor day event on Monday. 

JPMorgan and its rivals have benefited for years from rising interest rates. Now, with inflation still stubbornly high and the Fed holding off on lowering borrowing costs, the industry is beginning to see customers pull back on demand for loans and shift their cash to higher yielding alternatives. 

That has put pressure on net interest income, the difference between what a bank collects on loans and pays out to depositors. New York-based JPMorgan generated $23.1 billion in NII in the first three months of 2024. 

While that was up 11% from a year earlier, it was the first time in seven quarters that the bank didn’t report a record haul for the metric. Still, JPMorgan said it’s seeing fewer customers shifting money to higher yielding accounts than it expected at the start of 2024, helping to boost the NII forecast. 

JPMorgan’s investor day comes on the heels of a series of management changes in which Jenn Piepszak and Troy Rohrbaugh were named co-heads of a commercial and investment-banking unit that includes what was the corporate and investment bank as well as the commercial bank. Marianne Lake took sole leadership of the consumer arm.  

The company also raised its expense guidance for the year to $92 billion to reflect a $1 billion donation the bank made to its JPMorgan Chase Foundation, which it announced earlier this month. The contribution, tied to the firm’s exchange of Visa Inc. shares, will pre-fund donations to the foundation for the “next several years,” JPMorgan said at the time. 

Basel Changes 

JPMorgan also offered details of potential fallout from a proposed plan to increase capital requirements for big banks. Two-thirds of consumers would likely have to pay a monthly service fee for their checking accounts if the current proposals are implemented, though JPMorgan said that doesn’t reflect its current plans for dealing with the rules. 

Fed officials have indicated that the proposal, known as Basel III Endgame, will be dialed back, and Bloomberg reported earlier this month that agencies are working on a new version that could be finalized as soon as August.

Chief Executive Officer Jamie Dimon has called the proposals “hugely disappointing.” On Monday, the firm said it has been told to expect “broad and material changes” to the capital requirements, though it added that it’s unsure what that means. 

Still, even with the potential for stricter capital requirements, JPMorgan expects to be able to achieve a return on tangible common equity of 17% over the medium term, according to the presentation. The company said it remains cautious on buybacks, though. 

Consumer Health

With interest rates remaining elevated and inflation continuing to whittle away at customers’ savings, investors have been scouring bank results in recent quarters for signs of financial health among US consumers.

JPMorgan said it now expects charge-offs tied to its credit-card portfolio to reach 3.4% this year before rising to 3.6% in 2025. Losses tied to auto loans and business banking borrowings are also expected to increase slightly this year, the presentation shows. 

“Excess cash buffers have largely been exhausted,” JPMorgan said in the presentation. “We are closely monitoring consumers whose incomes have not kept pace with inflation.”

(Updates with additional information from slides beginning in second paragraph.)

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