J.P. Morgan’s Earnings Are Expected to Rise Slightly
What Investors Can Expect from JP Morgan’s 3Q15 Earnings
J.P. Morgan focuses on cost controls
In the previous part of this series, we looked at J.P. Morgan’s (JPM) revenues versus analysts’ estimates. Now let’s look at its earnings per share, or EPS, versus analysts’ estimates.
Wall Street (SPY) analysts expect J.P. Morgan to post a net income of $5.9 billion for the third quarter. This translates to an EPS of $1.6 for the quarter. Much of the rise in earnings is attributable to J.P. Morgan’s ability to cut costs.
J.P. Morgan’s second-quarter EPS of $1.7 beat Wall Street’s estimate of $1.5 by roughly 6%. During the same period last year, the company reported an EPS of $1.4. A dividend of $0.44 per share is expected for 3Q15.
In comparison, peers like Citigroup (C), Goldman Sachs (GS), Wells Fargo (WFC), and Bank of America (BAC) are expected to report earnings per share of $1.6, $5.1, $1.1, and $0.35 for the third quarter.
Trading incomes are expected to be hit
With the Federal Reserve deciding to keep a rate hike on hold, the trading incomes of major banks are expected to suffer.
Earnings have already been suffering from low interest rates and tepid demand for many kinds of loans, not to mention the global slowdown during the quarter. J.P. Morgan derives ~26% of its revenue from foreign sources. The trading business contributes a third to the revenues of these banks.
Earnings in the third quarter are expected to be hit by weaker revenues from bond trading desks. Even before the Fed’s decision was announced, the Greek debt crisis and China’s slowdown were leading investors to be cautious with the market.
At a Barclays conference, executives from Citigroup, Bank of America, and J.P. Morgan highlighted that they expect revenues to be hit by 5–10% during the third quarter.
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