JPMorgan Stock Slides on Warning of Steep 2026 Expense Growth

Shares of JPMorgan JPM fell 4.7% in yesterday’s trading session after Marianne Lake, the CEO of the company’s Consumer and Community Banking business, said at the Goldman Sachs 2025 U.S. Financial Services Conference that the Wall Street giant’s total expenses in 2026 are expected to rise by more than $9 billion to $105 billion.

The 4.7% drop is the biggest single-day decrease in JPM’s share price since April 2025.

Per Lake, the jump in costs will be primarily driven by an increase in growth and volume-related spending (like compensation costs, costs for branching/expansion, and costs related to credit card business growth), along with an increase in expenses related to investments in technology and artificial intelligence (AI).

Apart from these, structural inflation related costs like higher real estate and general operating overhead expenses will result in a rise in overall firm-wide expenses.

However, JPMorgan believes that such spending is purposeful as it is intended to support growth, investments in strategic areas and long term positioning, rather than mere cost escalation.

Details on JPM’s Branch Expansion Plans

Despite the rise of mobile and online banking, JPMorgan has been expanding its footprint in new regions. The company is expanding its affluent banking services by opening 14 new J.P. Morgan Financial Centers and plans to open more than 500 new branches by 2027, with 150 already built in 2024.

With this, JPM aims to boost market share and seize cross-selling opportunities in cards and auto loans.

Moreover, the company is committed to renovating 1,700 existing locations by 2027 to serve its customers better. In 2021, JPMorgan launched its digital retail bank, Chase, in the U.K. and plans to expand the reach of its digital bank across the European Union (to open a digital bank in Germany by mid-2026).

Lakes’ Other Comments at the Conference

Regarding the consumer and small-business segments, while JPM does not expect them to collapse, it sees them as more vulnerable than a year or two ago.

Lake stated, “Consumers look resilient, small businesses are resilient, but there's less capacity to weather an incremental stress because cash buffers have normalized and price levels absolutely are high even as inflation has come down at least. So I would just say that I would characterize the environment as being a little bit more fragile.”

She added, “Our outlook for next year would be for unemployment to grind a little higher and therefore, that to be reflected in consumption.”

In contrast to the warning on expenses, Lake gave a rather optimistic guidance for JPMorgan’s capital markets business. She said that the company’s investment banking (IB) fees are expected to increase in the low-single digit in the fourth quarter of 2025, while its markets revenues are expected to rise in the low teens.

JPMorgan’s Price Performance & Zacks Rank

In the past six months, JPM shares have rallied 12.1% compared with the industry’s 23% growth.

Currently, JPMorgan carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Outlook Provided by JPM’s Peers at the Conference

Citigroup’s C CFO Mark Mason said that the company’s IB fees are expected to jump in the fourth quarter of 2025 on a year-over-year basis, as deal-making continues to swell. Mason stated, “On the investment banking side, we're seeing continued momentum, particularly in M&A. We're probably looking at investment banking fees up in the mid-20s (percentage) year-over-year.”

However, Citi expects its markets revenues to be down in the low to mid-single digit in the fourth quarter from a year ago. Mason said, “The capital markets are wide open to some extent. We're seeing a lot of investment grade activity. Despite the shutdown, equity volumes and IPO volumes have held up.”

KeyCorp KEY anticipates adjusted total revenues (tax equivalent) to rise 15% in 2025 from the prior year, reflecting record revenue growth on the back of robust fee income and net interest income.

KEY expects fee income to exceed $750 million in the fourth quarter of 2025, with IB fees coming in $10-20 million higher than the prior-year quarter, higher than the flattish guidance earlier.

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This article originally published on Zacks Investment Research (zacks.com).

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