JPMorgan Chase & Co announced that its net interest income is expected to increase by $3 billion this year due to its acquisition of failed First Republic Bank. The largest U.S. lender agreed to take on $173 billion of the failed bank’s loans, $30 billion of securities and $92 billion of deposits. The integration process is expected to take about 12 months.
The purchase has been beneficial for JPMorgan as it has seen an influx of deposits from customers seeking safety in larger institutions. The bank also expects expense growth at low-to-mid single digits in the medium term and is targeting a 17% return on tangible common equity.
The acquisition of First Republic is part of a sector-wide upheaval that has roiled financial stocks and deepened worries of a crisis. JPMorgan’s purchase is a sign of confidence in the banking sector and a reminder of the importance of larger institutions in times of economic uncertainty.