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JPMorgan cuts outlook for net interest income on lower rates

NEW YORK (Reuters) - JPMorgan Chase & Co JPM.N expects about $55 billion (£43 billion) in net interest income for full-year 2020, down from an earlier estimate of $56 billion, Chief Financial Officer Jennifer Piepszak said on Tuesday.

FILE PHOTO: A woman passes by a JPMorgan Chase bank in Times Square in New York City, U.S., March 7, 2019. REUTERS/Brendan McDermid

Piepszak, at a virtual conference hosted by Barclays, also said the current trend points to 2021 net interest income of about $13 billion per quarter.

JPMorgan’s third-quarter trading revenue will be up about 20% from a year earlier, Piepszak said.

Citigroup Inc C.N expects third-quarter markets revenue will be up by a "low double-digit" percentage from a year earlier, Chief Financial Officer Mark Mason said on Monday at the same conference.

JPMorgan does not expect to add a meaningful amount to its loan loss reserves after making large provisions at the end of the first and second quarters, she said.

Banks are earning less interest on loans while the Federal Reserve holds interest rates down to support the economy.

Trading revenue at the biggest banks has been one of the few bright spots in their results since the coronavirus outbreak.

Piepszak said the bank has reserved for worse loan losses than it would expect under its base case for the economy.

“While things do look a little bit better than we thought they would, we’re still dealing with an enormous amount of uncertainty looking ahead,” she said.

“We would have to have confidence in the outlook before we would release reserves,” she said.

Piepszak added that slack loan demand is weighing on net interest income.

Consumers are paying off more of their credit card charges and paying down home loans, she said. And, many businesses quickly paid back the money they had borrowed on revolving credit lines when the pandemic started.

“Loan growth, I think it is fair to say, will be challenged,” Piepszak said.

Reporting by David Henry in New York; Editing by Richard Chang and Marguerita Choy

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