Here's Why Higher Interest Rates Matter to JPMorgan Chase

Here's Why Higher Interest Rates Matter to JPMorgan Chase

Interest rates are one of the most important catalysts for bank stocks right now, with higher rates promising improved profitability throughout the industry. Given that the Federal Reserve will meet next week to decide whether to raise rates, in turn, it's worth reviewing JPMorgan Chase's (NYSE: JPM) latest interest rate sensitivity analysis.

Every quarter, large banks update investors on the impact to their top lines in the event that interest rates rise or fall. JPMorgan Chase does so in a table on page 75 of its second-quarter 10-Q. In it, the nation's biggest bank by assets lays out four different scenarios. The first assumes that interest rates rise by 100 basis points, or 1 full percentage point. The second assumes that rates rise by twice that, or 200 basis points. The third and fourth scenarios do the same thing, though they presume a decline in rates.

Scenario

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Source: Fool.com