After an impressive fourth-quarter 2019 performance driven by rise in client activities, JPMorgan’s JPM trading revenues (constituting nearly 20% of the top line) are likely to have maintained the momentum in first-quarter 2020. This is expected to support the bank’s upcoming results, scheduled to be announced on Apr 14.
Coronavirus-related concerns resulted in an unexpected rise in market volatility during the to-be-reported quarter. With a spike in volatility and higher client activities, JPMorgan’s trading businesses (both equity and fixed income) are likely to have received a significant boost.
Although the year 2020 began on a positive note, coronavirus and concerns surrounding its impact on the economy resulted in a roller coaster ride, with all the major indexes — the S&P 500, Dow Jones and Nasdaq — swinging from new highs to record lows. Given such a volatile market performance, investors are moving toward safe havens like Treasury bonds and other commodities like gold. Hence, JPMorgan’s equity and fixed income market revenues are expected to have improved in the to-be-reported quarter.
Before the virus wreaked havoc on investor sentiments and resulted in heightened volatility, JPMorgan had projected “mid-teens” percentage growth in trading revenues for the first quarter.
Thus, trading revenues are likely to have been solid in the to-be-reported quarter. The Zacks Consensus Estimate for equity trading revenues of $1.97 billion suggests a rise of 13.3% from the prior-year reported number. The consensus estimate for fixed income trading revenues indicates an increase of 1.3% year over year to $3.77 billion.
Earnings & Revenue Expectations
For JPMorgan, the Zacks Consensus Estimate for earnings of $2.49 indicates a 6% decline on a year-over-year basis. Also, the consensus estimate for sales of $29 billion suggests a marginal fall from a year ago.
JPMorgan Chase & Co. Price and EPS Surprise
JPMorgan Chase & Co. Price and EPS Surprise
JPMorgan Chase & Co. price-eps-surprise | JPMorgan Chase & Co. Quote
See what other factors are likely have to influenced JPMorgan’s overall performance during the first quarter.
Our Take
During the first quarter, the operating backdrop remained challenging. Lower interest rates are likely to have hurt this Zacks Rank #3 (Hold) stock’s revenue growth to some extent. However, robust trading revenues and a substantial rise in refinancing are likely to have offered marginal support.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Trading Revenue Expectations for Other Players
Trading revenues constitute a major portion of total revenues for Bank of America BAC, Citigroup C and Morgan Stanley MS. Similar to JPMorgan, impressive trading performance is likely to have provided support to these banks’ revenues and earnings in the first quarter.
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