JPMorgan expects to earn $3 billion more in net interest income this year after its takeover of failed First Republic Bank

• JPMorgan raised its 2023 outlook for its net interest income from $81 billion to $84 billion.
• The bank cited its takeover of First Republic, but added that "sources of uncertainty remain."

JPMorgan Chase expects to earn more in net interest income this year on the back of its takeover of failed First Republic Bank.

The forecast goes counter to other US banks' shrinking profits, and the firm now anticipates pulling in $84 billion in net interest income, up from the previous outlook for $81 billion, according to a Monday presentation for its investor day.

JPMorgan's net interest income, or the margin between what a bank pays on deposits and what it earns on loans, is set to climb thanks to its deal for First Republic earlier in May.

But "sources of uncertainty remain," it said, including balance sheet growth, the magnitude of deposit repricing, the pace of quantitative tightening, and the severity of a recession.

The estimate is based on the assumptions that the fed funds target upper bound reaches 4.75% by year end, after two rate cuts in the fourth quarter, as well as mid-single digit loan growth and slightly lower deposits year-over-year.

Meanwhile, the medium-term outlook for net interest income hovers in the mid-$70 billion range, JPMorgan noted, because it will eventually need to pay higher interest rates to those saving money at the bank, which digs into profit margins.

Larger banks like JPMorgan have been able to capitalize on the Federal Reserve's rising interest rates over the last year, as it allows them to charge borrowers more for loans, and they don't have to significantly pass on higher rates to savers.