JP Morgan beats analysts’ estimates as bond trading revenue surges by nearly 90%

Finance

Jamie Dimon, CEO of JP Morgan Chase, speaking at the 2019 WEF in Davos, Switzerland on Jan. 23rd, 2019.

Adam Galica | CNBC

J.P. Morgan Chase is scheduled to report fourth-quarter earnings before the opening bell Tuesday.

Here’s what Wall Street expects:

Earnings: $2.35 a share, a 19% increase from a year earlier, according to Refinitiv.

Revenue: $27.96 billion, a 4.3% increase from a year earlier.

Net Interest Margin: 2.37%, according to FactSet

Trading Revenue: Fixed income $2.61 billion, Equities $1.37 billion

J.P. Morgan, the biggest U.S. bank by assets, is the first major lender to report earnings. The company is closely watched by investors looking for clues into how the industry’s Wall Street and Main Street businesses fared in the quarter.

J.P. Morgan CFO Jennifer Piepszak said trading revenue was “meaningfully” higher in the fourth quarter versus a year ago. The rebound comes from the industry’s’ fixed-income trading operations, projected to rise 25% on average, versus a 3% bump in stock trading revenue, KBW analyst Brian Kleinhanzl wrote last month.

Bank stocks finished 2019 on a tear, outpacing the broader stock indices in the fourth quarter as investors rushed into an under-owned sector. J.P. Morgan, in particular, surged last year, climbing about 40%, a sharp move higher than prompted some analysts to cut their recommendations based on valuation.

But banks may face pressure this year as interest rates stay low or are even slashed further. The Federal Reserve cut its benchmark rates for the third time in October, and that pressures net interest income, or the revenue that banks garner from collecting loan payments, minus the interest it pays to depositors.

This story is developing. Please check back for updates.

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