JPMorgan Chase & Co (JPM.N) largely maintained its key profit goals for the medium term on Tuesday, signaling steady but slower growth, and raised its financial commitment for clean-energy initiatives after years of pressure from environmental activists.
The largest U.S. bank will target $200 billion in lending and other financial services for green and sustainable companies and projects, up from an earlier target of $175 billion set in 2017, according to a presentation ahead of its annual investor day.
The new target, however, failed to satisfy some climate-change activists who flocked outside JPMorgan’s New York headquarters, partially blocking some entrances and demanding that the bank get rid of fossil-fuel clients.
At the investor meet, Chief Financial Officer Jennifer Piepszak said she was confident that the bank’s near to medium-term growth would be backed by a robust U.S. economy, despite some near-term headwinds.
“We can outperform on a relative basis regardless of the environment,” Piepszak said. “Although risks are more skewed to the down side given … risks like coronavirus, we are confident that the strength of our operating model will continue to demonstrate strength.”
The bank projected that return on tangible common equity (ROTCE), a key measure used to determine how well a bank is using its shareholders’ money, will be the same as last year’s target of 17%.
However, JPMorgan cut its outlook for net interest income (NII) to $57 billion for 2020 from $57.8 billion in 2019, blaming lower interest rates.
The bank forecast NII of $60 billion or more for 2021, which was above analysts’ estimates.
The bank also forecast higher expenses of $67 billion, compared with $65.3 billion last year, despite a “reduction in structural expenses.”
UNCHANGED PROFIT GOALS
The presentation showed that JPMorgan’s outlook remained unchanged for profit at its corporate & investment bank (CIB), a disappointment for analysts who had expected the lender to push for higher growth at the unit that accounted for a third of total revenue in 2019.
It expects return on equity of 16%, unchanged from the target that was set a year ago.
Targeted return on equity stayed unchanged at 25%-plus for the consumer & community banking segment, and remained flat at 18% for the commercial banking segment.
JPMorgan also maintained the outlook for the asset and wealth management business and said it expected a 25%-plus return on equity in the medium term.