Next year's expenditure guidance of $105 billion exceeds expectations, and JP Morgan fell nearly 5% during the session

Marianne Lake, an executive at JPMorgan Chase, stated on Tuesday that the bank expects its expenses to reach $105 billion next year, a guidance that exceeds analysts' expectations and led to a more than 4.7% intraday drop in JPMorgan's stock price.

Media reports indicate that Lake, who is currently the CEO of JPMorgan's Consumer and Community Banking division, disclosed several of JPMorgan's latest business outlooks during a Goldman Sachs conference on Tuesday. She mentioned that JPMorgan anticipates a credit card write-off rate of approximately 3.3% by 2025, while also expecting total expenses to reach $105 billion for the entire year of 2026.

This expense guidance is higher than the highest expectations set by analysts and exceeds the average expectation of $101.1 billion. If expenses are around $105 billion, it would be approximately 9% higher than analysts' current expectations for 2025 costs. In the first nine months of this year, JPMorgan's non-interest expenses increased by 4% year-on-year.

She expects that the biggest driver of cost growth will be "expenses related to business scale and growth." She also pointed out that the current consumer environment is "somewhat fragile," and strategic investments along with "structural impacts from inflation" are also significant reasons.

Lake stated that the Consumer and Community Banking division she oversees is a "key factor" driving overall expense growth. She cited examples such as incentive compensation for financial advisors, product marketing, branch construction, and investments in artificial intelligence as reasons for the rising costs.

JPMorgan's stock price fell more than 4.7% at one point during Tuesday's trading, marking the largest intraday drop since mid-October, making it the worst-performing component in the KBW Bank Index.

Lake's comments regarding consumer health weighed down the entire banking sector. Citigroup and Bank of America also saw their stock prices decline, both dropping more than 1%.

On a more positive note, Lake pointed out that JPMorgan's investment banking fee income is expected to achieve low single-digit growth year-on-year in the fourth quarter, while market revenue is expected to grow to low double-digit levels year-on-year.

Additionally, Lake mentioned at the conference that JPMorgan still expects to add 10.5 million new credit card accounts by 2025, with progress towards this goal on track