After the First Republic transaction, JPMorgan predicts a $3 billion increase in yearly NII


According to a research note from JPMorgan, the bank expects its net interest income (NII) to increase by an estimated $3 billion annually, following the completion of its deal to acquire First Republic Bank. JPMorgan plans to pay First Republic shareholders a total consideration of $3.6 billion, while signing a definitive agreement to acquire the private banking institution. JPMorgan expects the acquisition, which is expected to close in the third quarter of 2021, to be immediately accretive to earnings per share (EPS).

The bank also anticipates that the additional net interest income from the deal will be incrementally beneficial to its overall return on tangible common equity (ROTCE) and expense efficiency ratio (EER). The note further stated that the benefits of the additional NII will begin to materialize in the first full year following the completion of the deal.