Net interest income

And already we've seen a number of international banks moving when it comes to their deposit rates and interest rates.

Your net interest income was up 9% to $3 billion.

Just tell us about that side and why you're now seeing NII start to increase.

Yeah, we've raised our NII guidance to 4% for this year and we're really pleased with the momentum that we're showing in that.

What really drove that for us was the volume growth that we're seeing.

So we've got good franchise growth across our customers and we're seeing good momentum in their demand for our services.

Right overall, and there's one thing, we just had Gerard Cassidy, kind of the legendary analyst from RBC, bank analyst, on our podcast last month.

And one of his themes, and we've been seeing this, Rich, in our data too with our clients, is the net interest income, like the NII levels.

for banks has been improving, right? It's been really strong and we're still expecting that to increase.

It's slowing a bit, but the point here is that we're in a much better spot than we were a couple of years ago.

So if there are opportunities to insure, to hedge, to mitigate risk, it's a lot better to do it when things are good.

And when you might have some extra income coming down the road that you can now kind of distribute versus, I don't know, in 2020, 2021, then when a lot of the NII graphs are going lower, right? Income was good because of PPP maybe and some things going on with the pandemic, but a lot of the trends were going down.

So I think banks and credit unions need to kind of remind themselves that to hedge does cost some money usually.

You know, we had a period of time here in the 2022-2024 frame when you got paid to hedge because the curve was so inverted.

And so when interest rates go up quickly, they can reprice their assets very quickly.

That's good news because that gives you that NII and endowment uplift.

Not necessarily the boost though from the markets activity that the Wall Street names might enjoy.

So Bank of America does have an important wealth management business in the form of Merrill, but they don't have as much traditional investment banking advisory and all the rest.

That's above the medium term guidance of 5% to 7%.

And they were challenged on the call about whether or not that's a rates driven growth rate or if there's other factors here.

And their view is that other things are helping here, like 4% to 5% growth that they expect in deposits, for example, that will obviously help with NII.

And then further down the income statement, they expect operating leverage of 200 to 300 basis points over the medium term, even with the costs related to this regulatory penalty and all of the compliance things that they need to put in place.

They beat profit estimates, but net interest income and revenue fell short.

So they had EPS of $1.87, which exceeded the $1.85 estimate, but revenue of $21.87 billion missed expectations.

Net interest income, or NII, increased 5% to $12.52 billion, also below expectations.

Higher deposit costs were among those pressures.

Average loans and deposits grew approximately 11% annually.

When JP Morgan's trading, fixed income trading desk is underperforming, it's fine because, you know, getting the elevator up to a different floor, different department, and this is perfect.

So if you talk about something called their net interest income, so this is on the retail side of the bank.

They did something quite extraordinary in the quarter that's just gone.

Then-

[marching band music] When you need a team that will do whatever it takes on game day, it matters where you stay.

Hilton for the stay

stayNet interest income was above, broke the $100 billion mark, uh, for the first time ever in their history.

And in fact, for any bank ever on the planet in the history of banking, no one has ever topped the 100 billion net interest income ceiling.

That's great activity, also bodes well for the US economy because the core, uh, companies are borrowing.

But if you look at that NII, what we said, uh, back, uh, last fall was this year, '26 would be 5 to 7% increase over tw- '25.

We now have sa- We've raised that and now said we confirm 8% for the year.

And then at that same time we sort of said 5 to 7 for '27, and we just raised that to 8% plus.

So we feel good about the franchise.

The pipelines are full, et cetera.

But it's that core, good core engine of NII that's growing at 8% when, when others are not coming close to that that's driving our, our earnings forward.

As you know, this is against the backdrop of much higher interest rates, a real repricing in the bond market as well.

Moving on to corporate news, big focus today on the unofficial start to quarter three earnings season led by the big banks.

JPMorgan Chase quarter three earnings missed, though guided quarter four NII above.

Further gains for full year 'twenty-seven NII ex markets.

Wells Fargo NII and fee revenue light.

Goldman Sachs earnings beat with strong results from IB fees and equities trading.

Citigroup NII better but fee income missed.

Guided for better full-year efficiency ratio.

Outside of the banks, Johnson & Johnson posted a marginal lower quality beat, but med tech results below.