JPMorgan Chase backtracks on key performance target, says it can reach 17% returns this year

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JPMorgan Chase on Monday reversed course on guidance it gave in January, saying the bank could achieve a key performance target this year after all.

The lender said that a 17% return on tangible common equity «remains our target and may be achieved in 2022,» according to a presentation. That's a switch from earlier this year, when CFO Jeremy Barnum warned that headwinds, including rising costs, would cause the bank to miss its target for the next one to two years.

JPMorgan shares rose 1.6% in premarket trading.

While guidance around 2022 expenses was unchanged at about $77 billion, rising interest rate expectations as the Federal Reserve combats inflation may be proving a boost. The bank said that net interest income in 2022 could exceed $56 billion, well above the $50 billion estimate given in January.

JPMorgan is holding its first Investor Day since 2020 in response to questions from investors and analysts about the bank's strategy and investments. The bank's shares began tanking in January after it revealed an unexpected jump in fourth-quarter expenses and management said that it would likely miss its 17% target for returns.

Analysts wanted greater detail on the types of investments in technology, personnel and acquisitions embedded within expectations for an 8% increase in expenses this year to $77 billion.

«This issue is certain to us: front-loaded spending for less certain back-ended benefits,» veteran bank analyst Mike Mayo wrote in a January note in which he slashed his recommendation on JPMorgan shares.

Since then, JPMorgan executives realized that they erred in not giving more disclosure around their business plans, which include roughly $15 billion in investments for 2022 alone, according to a