NEW YORK (
(JPM - Get Report)
CEO Jamie Dimon will be looking to put the story of of the "London Whale" trading loss to rest when the bank reports its third quarter earnings on Friday, but that's not the only issue.
The bank took the bulk of the hit for the failed hedging strategy in
the second quarter
and the stock has significantly recovered since the first announcement of the debacle.
But Dimon will still have to convince investors that JPMorgan's troubles are behind it, amid
fresh legal battles
and ongoing economic uncertainty.
Analysts expect the country's largest bank to report an earnings per share of $1.21 on revenues of $24.531 billion, according to consensus estimates available on Thomson Reuters.
As Barclays Capital analyst Jason Goldberg notes, JPMorgan has outpaced street expectations in 16 out of 17 quarters, so the bar will be predictably high.
The results are likely to be skewed by one-off items including accounting losses (DVA) stemming from the rising market value of the bank's debt and charges from the continuing unwinding of synthetic credit positions that cost the bank dearly this year.
But excluding the noise, analysts expect the bank to report a significantly better third quarter relative to the previous year.
Capital markets revenue is likely to have rebound sharply from a year ago when U.S. sovereign debt was downgraded for the first time, wrecking the markets. Mortgage banking revenue is expected to be solid as well, thanks to the refinancing boom.
Pressure on interest margins and elevated legal and other expenses are likely to be the key negatives in the quarter, though those might be issues that affect all of the big banks.
Here's five things that investors will be watching out for when the bank reports Friday.
Does Schneiderman Have a Case?
Last week, New York Attorney General Eric Schneiderman fired his first salvo as the co-chair of the Residential Mortgage-Backed Securities Working Group,
filing a lawsuit against JPMorgan
for allegedly fraudulent misrepresentations made by its Bear Stearns unit in the sale of mortgage backed securities. This was of course prior to the bank's acquisition of Bear Stearns in 2008.