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Bank earnings: JPMorgan slides on net interest income woes

Shares of major banks JPMorgan Chase & Co. (JPM), Wells Fargo (WFC), and Citigroup (C) opened Friday's trading session under pressure following the release of their first-quarter earnings reports.

A key factor being closely watched is the decline in net interest income across these financial institutions. This decline in net interest income, which reflects the difference between the interest banks earn and the interest they pay out, is a concern as consumers face mounting spending pressures in a higher for longer interest rate environment.

Yahoo Finance's Seana Smith and Madison Mills break down the details, focusing on JPMorgan CEO Jamie Dimon's commentary from the company's earnings call.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance.

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This post is written by Angel Smith

Video transcript

SEANA SMITH: Well, the big story that we're watching today is big bank earnings, JP Morgan, Citi, Wells Fargo all in the red. Actually, Wells Fargo now trading to the upside. We're looking at gains of just about a tenth of a percent.

One of the common themes here is net interest income and exactly what we heard from all three of the banks that actually declined quarter over quarter across the board. And I bring this up because of the commentary that we're getting out from JP Morgan, from the earnings call, Maddie, and the recall that they had with media reporters not too long ago, because the net interest income guidance was really what was in focus, not so much what we got here for Q1, but really, what JP Morgan is seeing going forward. And it was something that was brought up on both calls here, the fact that JP Morgan the bank did not raise its 2024 full year number on changing rate expectations. Executives there saying that the net interest income outlook is not meaningfully different there, so maintaining their prior guidance, and that's causing the bank to keep its number at $90 billion.

Though, also, the other thing I wanted to point out, which Cameron was just speaking about there, was some of the weakness that Jamie Dimon mentioned when it comes to the consumer, specifically the low income consumer, not necessarily taking out more loans, but he has seen a bit of the-- the fact that those consumers are pulling back on spending could be a bit worrisome here as we enter what is expected to be a very uncertain time.

MADISON MILLS: It's a great point because the CFO also mentioned that of JP Morgan, talking about how they are seeing that consumers are able to withstand the inflation because of their wages. But obviously, that is applicable to one particular group of the population. So we do continue to see this bifurcation happening, and we see that throughout the earnings cycle, by the way. We'll continue to see that as we start to see evidence potentially of consumers trading down, as well. So there are so many ways to look at the consumer health in this market. And then we have consumer sentiment also coming in a little bit hotter than anticipated, so all of this data coming together to paint a little bit of a picture of a consumer that's starting to buckle here.