Shares of the biggest US bank suffered their worst collapse since April. Its costs will rise

JPMorgan shares plunged 4.7% to $300.5 in trading Tuesday, Dec. 9, posting their biggest one-day decline since April 4. In addition, this fall was the strongest among all components of the index Dow Jones Industrial Average, calculated Yahoo Finance.

Investors began selling off shares of the largest U.S. bank after top executive Marianne Lake said at a Goldman Sachs conference that JPMorgan's spending in 2026 will be about $105 billion. The amount was higher than even the most pessimistic forecast of analysts surveyed by Bloomberg. The consensus was for $101.1 billion; the new estimate beats it by about 9%.

The bank's expenses will reach $95.9 billion by the end of 2025, it estimated in its third-quarter report . In the first nine months, they rose 4% compared to the same period in 2024.

According to Lake, JPMorgan is forced to increase costs primarily because of "costs associated with expanding business volumes and operations." This includes, for example, employee compensation and marketing of product lines. She also cited the "structural effects of inflation." Lake cited the Consumer & Community Banking division, which she heads, as the "big driver" of the spending increase.

Wells Fargo analyst Mike Mayo wrote Tuesday that a rise in investment could help the largest U.S. bank improve its competitive edge. However, he cautioned that it's a negative for the industry as a whole. "The others may also have to spend more to maintain market share as the effects will have a cascading effect," he warned.

The announcement of the scale of spending, which was not foreseen on Wall Street, reminded investors of the events of January 2022, notes Bloomberg. JPMorgan then announced that it planned to increase costs by about $6 billion. The money was to be spent on investments in technology, hiring and compensation growth. Market participants perceived these expenditures as excessive, especially amid concerns about pressure on margins. As a result, bank shares fell more than 6% in a day, the worst collapse since the pandemic began. The sharp market reaction prompted CEO Jamie Dimon to announce an investor day in February to clarify its spending strategy. Quotes remained under pressure until the event, which took place in May, but the five-hour presentation helped reassure shareholders, the agency wrote.

JPMorgan's investment banking fees will grow by "low single-digit percentages" on an annualized basis in the final quarter of 2025, Lake said. Analysts had expected more - a 6.3 percent increase, Bloomberg reported. Trading revenue may add "low double-digit percent," above consensus. Amid a rebound in deals and equity offerings, investment banking brought in 11% more revenue for JPMorgan in the first nine months of the year, while trading revenue rose 20%.

This article was AI-translated and verified by a human editor