JPM JP Morgan Chase and Co

By Emily Glazer 

JPMorgan Chase & Co. says it is optimistic about 2018 and the impact the new U.S. tax law will have on its financial outlook.

The largest U.S. bank by assets shared new targets and expectations in its annual investor day presentation Tuesday, which for the first time included benefits from changes to the tax law.

Most notably, JPMorgan moved its medium-term target -- over the next two to three years -- for return on tangible common equity, a key profitability metric, to roughly 17% compared with its prior target of 15%. That is in line with Credit Suisse analyst Susan Katzke's 15% to 18% expectation, she wrote in a Tuesday research note. Excluding tax reform, the bank said its return on tangible common equity target for 2018 would be around 15%.

Still, the bank noted "significant uncertainty around how competitive dynamics evolve," and wrote that it expects "some benefit to pass to customers over time," according to its presentation for investor day, which was at the company's Park Avenue headquarters in Manhattan.

Finance Chief Marianne Lake, who spearheaded the presentation for the first year, said each of the bank's main businesses -- consumer banking, corporate and investment banking, commercial banking and wealth and asset management -- has increased medium-term targets "reflecting tax reform but also reflecting growth."

The largest U.S. bank by assets said its medium-term, pretax income is expected to increase to a range of $44 billion to $47 billion from $40 billion in 2017. JPMorgan also expects around 7% noninterest revenue growth in 2018 and 3% compound annual growth rate going forward, depending on market conditions.

The New York bank run by Chairman and Chief Executive James Dimon also said its capital ratio is expected to fall to 11% to 12% in the "medium-term" from 12.1% currently.

Total costs also are expected to rise to around $62 billion in 2018 from $58.5 billion in 2017. The 2018 figure includes $10.8 billion in technology spending and $5.7 billion in marketing costs.

Ms. Lake said she's hopeful about "more constructive regulatory backdrop" and added that the bank's "investing capabilities are limited only by the opportunities in front of us and our ability to execute against them."

Write to Emily Glazer at emily.glazer@wsj.com

(END) Dow Jones Newswires

February 27, 2018 10:46 ET (15:46 GMT)

JP Morgan Chase (NYSE:JPM)
Historical Stock Chart
From Aug 2024 to Sep 2024

JP Morgan Chase (NYSE:JPM)
Historical Stock Chart
From Sep 2023 to Sep 2024