JPMorgan Chase: Earnings Preview

JPMorgan kicks off third-quarter earnings reports in the morning.
Publish date:



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JPMorgan Chase

(JPM) - Get Report

kicks off bank earnings reports before the market opens on Wednesday and the big New York bank will likely set the tone for the rest of the industry's quarter.

JPMorgan's call will be the first earnings call for new CFO Doug Braunstein, who took over the position from Mike Cavanagh as part of a broader management shuffle at the company. (Cavanagh is now the head of JPMorgan's Treasury & Securities Services.)

JPMorgan Chase Chairman and CEO Jamie Dimon

While Chairman and CEO Jamie Dimon had typically let Cavanagh run the earnings conference calls, it's possible participants may hear a bit more from Dimon on the call as so that Braunstein can get his bearings, but also because there is likely to be a number of questions related to financial regulation, the latest foreclosure crisis and lending trends.

Follow JPMorgan's earnings conference call on Wednesday morning via


live blog.

Analysts on average are expecting the bellwether bank to report quarterly EPS of 88 cents a share -- up 7% from reported earnings in the year-earlier quarter -- on $24.5 billion of revenue, according to

Thomson Reuters


Investors will likely look first to the investment banking units at the large universal banks as trading revenue is expected to have taken a hit during the September-ending quarter.

However, bank stock analysts say that JPMorgan is likely to see only modest trading revenue declines as compared to other banks.

Jeff Harte, an analyst at Sandler O'Neill & Partners, expects JPMorgan's revenue to decline 7% sequentially to $23.8 billion, primarily driven by lower trading revenue in the investment bank.

However, Harte is also including $350 million of deferred tax asset (DTA) losses into his estimates. Including deferred tax assets, he expects trading revenue to fall by 26% sequentially (after having declined 34% in the prior quarter). Without the DTA writedowns, he expects JPMorgan's to decline by a modest 6% sequentially, he writes.

Jason Goldberg, an analyst at Barclays Capital, is predicting stable trading results at JPMorgan compared to the prior quarter leading the bank to likely outperform its peers for the quarter.

Analysts are also pointing to improved credit quality metrics, particularly in the bank's credit card division.

According to a note on Friday, Goldberg also estimates that JPMorgan's credit card losses to fall 100 basis points, which will result in a continued reserve release, he writes.

On the other hand, mortgage-related loan and repurchase losses are likely to remain "stubbornly high."

The topic of mortgage losses will ultimately lead to the latest foreclosure crisis that lenders are dealing with. JPMorgan is likely to get a plethora of questions on its conference call related to the foreclosure issue, and what sort of impact it will have on the bank, if indeed a national moratorium is put in place.

JPMorgan's three big bank rivals report quarterly earnings next week.

Citigroup (C) - Get Report reports on Monday, October 18th


Bank of America

(BAC) - Get Report

releases earnings on Tuesday, October 19th, and

Wells Fargo

(WFC) - Get Report

reports on Wednesday, October 20th.

--Written by Laurie Kulikowski in New York.

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Laurie Kulikowski


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