JPMorgan Chase & Co. experienced a notable drop in its stock price, declining 4.65% on Tuesday, making it the most significant loser in the Dow Jones Industrial Average for the day. This downturn came after executive Marianne Lake raised concerns about rising costs anticipated for 2026, attributed largely to increased competition in the credit card market and necessary investments in artificial intelligence.
During a conference in New York, Lake, who serves as the CEO of the bank’s consumer and community banking division, disclosed that the bank expects expenses to reach approximately $105 billion in 2026. CFO Jeremy Barnum had previously indicated to analysts that estimates of $100 billion in costs for that year may be underestimated. So far, the bank is on track for expenses to tally up to $96 billion in 2025 as of the third quarter.
Lake emphasized the bank’s confidence in its expenditure strategy, stating, “We feel really great about the expenses, not just how we’re investing the money but also in the context of the performance of the business.” She identified major areas for expense growth, including compensation and marketing within the consumer banking sector, as well as strategic investments in physical branches and technological advancements like artificial intelligence. Additionally, she pointed out that inflation-related factors, including real estate costs, are expected to contribute to the increase.
JPMorgan’s commitment to substantial spending is evident in its broader strategy. CEO Jamie Dimon has long argued that investments in the business should be seen as a strategic investment rather than a mere expense. This year alone, the bank plans to allocate $18 billion to technology initiatives, with a significant new headquarters recently opened in Manhattan and a new London headquarters set to take about six years to complete.
Regarding the financial health of U.S. consumers and small businesses, Lake noted a sense of resilience but also acknowledged a concerning trend. After relying on savings built during the pandemic, many customers are finding their financial buffers diminishing. This has led to a characterization of the economic environment as “a little bit more fragile.” The bank also anticipates a gradual rise in unemployment next year.
In terms of credit card performance, JPMorgan recently adjusted its expectations for charge-off rates this year to 3.3%, while projecting that these could rise to around 3.6% or lower in 2026. Lake also indicated that the bank’s investment banking fees are expected to see a low single-digit increase in the fourth quarter compared to the previous year, while the markets business could rise by low teens.
Furthermore, Lake tempered expectations for deposit growth in the coming year. Although JPMorgan set ambitious long-term goals to capture a 15% share of U.S. bank deposits and 20% of credit card loans, recent developments regarding the Federal Reserve’s pace of interest rate cuts could influence deposit growth negatively. Nevertheless, she maintains that higher rates have resulted in better margins, keeping JPMorgan optimistic about its long-term goals.
Overall, the latest financial outlook from JPMorgan reflects a balance between strategic investment and caution amid evolving market conditions, highlighting both challenges and opportunities as the bank navigates a competitive landscape.
