J.P. Morgan Chase is scheduled to report fourth-quarter earnings before the opening bell Tuesday.
Here’s what Wall Street expects:
Earnings: $2.20 a share, a 25 percent increase from a year earlier, according to Refinitiv.
Revenue: $26.8 billion, a 5.4 percent increase from a year earlier.
Net Interest Margin: 2.54 percent, according to FactSet
Trading Revenue: Equities $1.29 billion, Fixed Income $2.20 billion
J.P. Morgan, the biggest U.S. lender, is closely watched by analysts and investors as a bellwether for the financial industry.
Bank stocks were pummelled last year, particularly in the fourth quarter, on fears that a recession could be on the horizon, meaning rising losses across consumer and corporate loans. It was a comedown after the U.S. tax overhaul meant banks would produce billions of dollars more in profit in 2018, setting expectations for a rally in bank shares.
Still, under CEO Jamie Dimon, J.P Morgan has exceeded analysts’ profit expectations for 15 straight quarters. The bank has leading market share in retail, corporate and investment banking lines, giving it a diverse set of businesses to lean on when a particular area suffers.
Choppy markets in December probably crimped trading and investment banking fees at J.P. Morgan, according to Barclays analyst Jason Goldberg. Trading and investment banking revenue for the biggest U.S. banks probably fell up to 10 percent in the fourth quarter, driven by weakness in fixed income trading and debt and equity issuance.
On Monday, rival bank Citigroup posted profit that beat analysts’ estimates on cost cutting and a revenue shortfall triggered by a 21 percent decline in fixed income trading. Bank of America, Goldman Sachs and Morgan Stanley report later this week.
As for lending operations, analysts expect that growth in loans and net interest margin, a key measure of profitability, amid interest rate increases should benefit banks in the quarter. J.P. Morgan may post core loan growth of 6 to 7 percent in the quarter, Goldberg said.
Shares of J.P. Morgan fell 8.7 percent last year, the smallest decline among the six biggest banks and a better showing than the 20 percent decline of the KBW Bank Index. As a result, J.P. Morgan has the highest price-to-book value among its peers.