The largest American lender, JPMorgan’s JPM shares touched an all-time high of $279.23 on Friday. Though the stock closed a tad lower, it has soared 15.4% this year. This impressive rise has outpaced the 13.4% rally of the industry it belongs to and the 3.9% growth of the Zacks S&P 500 composite.

Meanwhile, its peers, Citigroup C, has jumped 20.2% and Bank of America BAC has gained 6.9% so far this year.

YTD Price Performance
 

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Technical indicators suggest continued strength for JPMorgan. At present, the stock is trading above its 50-day and 200-day moving average, indicating a bullish trend. 

50-Day & 200-Day Moving Average
 

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This underscores positive market sentiments and confidence in the company's financial health and prospects.

JPMorgan: A Case for Rates to Remain Higher for Longer

Last week’s troubling inflation report, which showed the consumer price index gaining 0.5% month over month and pushing the annual inflation rate to 3%, along with a strong job market and still solid consumer spending, have reduced the chances of the Federal Reserve easing its monetary policy anytime soon. 

Further, Fed Chair Jerome Powell, during his appearance before the House Financial Services Committee on Wednesday, noted “we’re not quite there yet. So we want to keep policy restrictive for now.” Also, the Trump-led administration has been announcing tariffs almost daily. Tariffs are considered to be inflationary and could even hamper economic growth.

All these built a strong case that interest rates are expected to remain higher for longer. Hence, JPMorgan stands to gain from this. The company’s net interest income (NII) witnessed a five-year (ended 2024) CAGR of 10.1%, mainly driven by the high-interest rate regime since 2022. Management expects NII to trough by mid-2025 and rise thereafter on the assumptions of one rate cut and decent balance sheet growth. As such, the company anticipates NII to be almost $94 billion compared with $93 billion reported in 2024.

Resurging Capital Markets to Support JPM

JPMorgan’s capital markets business (that includes investment banking or IB and markets) has been witnessing a robust comeback. Last year, investment banking fees (in the Commercial & Investment Bank segment) jumped 37% year over year after declining 5% in 2023 and 59% in 2022. Likewise, as trading volume and market volatility remained high in 2024, markets revenues benefited from that and grew 7%. A similar trend was witnessed by JPM’s close peers – BAC and C – in the IB and trading businesses.

JPMorgan is optimistic about the performance of the IB business going forward. Further, it expects Markets to add approximately $4 billion to firm-wide NII this year compared with just $1 billion generated in 2024.

Additionally, at the Bank of America Financial Services Conference on Feb. 11, JPMorgan’s newly elected chief operating officer, Jennifer Piepszak, provided a sneak peek into how the capital markets business is expected to perform in the first quarter of 2025. Discussing markets revenues, she noted that momentum “has continued into the first quarter.” The metric is expected to be up in low double digits on a year-over-year basis.

Further, Piepszak stated that IB fees in the first quarter will grow in the mid-teens range year over year. This is expected to be driven by “healthy” equity markets and debt issuances and the resurgence in IPOs. Further, mergers and acquisitions “will take some time to play out” but the company remains optimistic about the advisory business being a “tailwind” throughout the year.

Opportunistic Acquisitions & JPM’s Other Expansion Efforts

JPMorgan has been growing through on-bolt acquisitions, both domestic and global. In 2023, the company increased its stake in Brazil's C6 Bank to 46% from 40%, allied with Cleareye.ai (a financial technology firm focused on trade finance) and acquired Aumni. 

Also, the company acquired the failed First Republic Bank in 2023. The deal continues to benefit JPM’s financials immensely and even helped it reach record profits last year. Additionally, in 2022, it acquired Renovite and a 49% stake in Greece-based Viva Wallet and Global Shares. These deals, along with several others, are expected to support the bank's plan to diversify revenues and expand the fee income product suite and consumer bank digitally.

In February 2024, JPM announced plans to open more than 500 branches and renovate roughly 1,700 locations by 2027-end. Of the total branches to be opened, 150 were built last year. As of Dec. 31, 2024, it had more than 4,950 branches across all 48 states in the United States. 

JPMorgan actively seeks to expand its digital retail bank – Chase – across the European Union countries after launching it in the U.K. in 2021. The company is focused on bolstering its IB and asset management businesses in China.

JPMorgan’s Fortress Balance Sheet and Solid Liquidity

As of Dec. 31, 2024, JPM had a total debt worth $750.1 billion. The company's cash and due from banks and deposits with banks were $469.3 billion on the same date. The company maintains long-term issuer ratings A-/AA-/A1 ratings from Standard and Poor’s, Fitch Ratings and Moody’s Investors Service, respectively.

Hence, JPM continues to reward shareholders handsomely. After clearing the 2024 stress test, the company increased its quarterly dividend by 8.7% to $1.25 per share in September. In February 2024, the company announced a 9.5% hike in quarterly dividends, which followed a 5% increase in 2023. In the last five years, it hiked dividends four times, with an annualized growth rate of 6.03%. Currently, the company's payout ratio is 27% of earnings.

The company also authorized a new share repurchase program of $30 billion, effective July 1, 2024. As of Dec. 31, 2024, almost $19 billion in authorization remained available.

Elevated Mortgage Rates to Hurt JPM’s Mortgage Business

As mortgage rates remained high in 2022 and 2023, JPMorgan’s mortgage fees and related income performance turned dismal. With the demand for mortgage loans and refinancing declining, the metric recorded a negative CAGR of 13.6% over the three years ended 2024. Though the trend reversed in 2024, origination volumes and refinancing activities are less likely to witness solid improvement as mortgage rates are expected to remain on the higher side. 

Per the January 2025 commentary from the Fannie Mae Economic and Strategic Research Group, the mortgage rates are expected to remain well above the 6% mark in 2025 on “expectations for fewer additional rate cuts over the coming years in response to incoming economic and other data.” Higher mortgage rates will undeniably take a toll on origination and refinancing volumes. Hence, JPMorgan’s mortgage fees and related income are less likely to record solid growth in the near term.

JPMorgan’s Asset Quality Subdued

JPMorgan’s asset quality has been deteriorating. While the company recorded negative provisions in 2021, a substantial jump in provisions was recorded in the years after that because of the worsening macroeconomic outlook. The metric surged 169% in 2022, 45.9% in 2023 and 14.9% in 2024. Likewise, net-charge offs grew 117.6% in 2023 and 39.1% in 2024. 

As the interest rates are expected to remain higher for longer, it is expected to hurt the borrowers’ credit profile. The company remains vigilant about the effects of continuous high rates and quantitative tightening on its loan portfolio. Hence, the company’s asset quality is likely to remain weak.

Will the Momentum to Continue for JPMorgan Going Forward

Earnings estimates for JPMorgan for 2025 and 2026 have been revised upward over the past 30 days. The positive estimate revision depicts bullish sentiments for the stock.

Earnings Estimates Trend
 

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The Zacks Consensus Estimate for JPM’s 2025 earnings implies an 8.4% fall year over year because of weakness in the mortgage banking business and higher non-interest expenses. Management anticipates non-interest expenses to be almost $95 billion this year, up from $91.1 billion in 2024. Also, weakening asset quality will hurt its financials.

Meanwhile, 2026 earnings indicate 7.3% growth. 

Earnings Estimates
 

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Find the latest earnings estimates and surprises on Zacks Earnings Calendar.

Given an impressive rally in JPM shares, it appears slightly expensive relative to the industry. The stock is currently trading at the forward 12-month price/earnings (P/E) of 15.14X. This is above the industry’s 14.52X, reflecting a stretched valuation.

Price-to-Earnings F12M
 

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Further, investors must take into account the bearish analyst stance on JPM for this year and keep a watch on the NII trajectory and the pace of interest rate cuts. Nonetheless, JPMorgan’s leading position in several businesses, CEO Jamie Dimon’s leadership and strategic plan to expand its footprint globally gives it an edge over its peers. Its focus on building a solid deposit franchise and bolstering its loan book positions it well for future growth. 

Hence, investors should consider parking their cash in JPMorgan at its current price levels for solid long-term returns despite premium valuation. 

JPM currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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