When Will You Resume Share Buybacks:
JPMorgan was forced to suspend its $15 billion buyback program in the wake of the trading fiasco in May. But following the second quarter results, the bank said it hopes to be in a position to resume buybacks in 2013.
Stifel Nicolaus analyst Chris Mutascio believes that the firm's trading fiasco may still have some impact on the Fed's approval of its buyback.
"We believe there is a human element that goes into the CCAR process and there may be at least some amount of risk that the regulators look at the London trading issue, which occurred just weeks after JPM was approved for $16.4 billion in capital deployment actions (dividends and buy backs), when determining how much overall capital deployment they will allow in 2013," wrote Mutascio in a report Wednesday.
Analysts expect the bank to finish the third quarter with a Basel III Tier One Capital of 8.3%.
Merrill Lynch analyst Erika Penala said in a report Tuesday that the bank is well positioned to return $15 billion in 2013 following the stress tests.
Housing Recovery and Mortgage Banking:
The Fed's third round of quantitative easing and encouraging signs of a recovery in housing have helped bank stocks rally in the third quarter.
Merrill Lynch's Penala believes the market is underestimating how much JPMorgan can gain from a recovery in housing.
"We believe investors are incorrectly overlooking [Citigroup] and [JPMorgan] on the housing theme, as both EPS power and market multiples are highly levered to a recovery. With consolidated loan loss reserves at 4.4% of loans for C and 3.3% for JPM versus 2% median of the large cap regional banks, the money centers have significantly more room to release reserves," she wrote in a report. "Improving credit should benefit EPS at C by 19% and JPM by 14% in '13, vs. 6.3% at the median large-cap regional."
The market will be tuning in for Dimon's commentary on whether the housing recovery is real and what it means for the bank in terms of loan growth and credit quality as well as what it means for the economy overall.
--Written by Shanthi Bharatwaj in New York