JPMorgan Chase (JPM) third quarter earnings report isn’t as hotly anticipated as its second quarter report, when the bank had to account for its massive London Whale trading loss. But JPM’s report will still be watched closely, as it kicks off a slew of earnings reports from banks over the next week or so.
JPM is expected to post $1.22 in earnings, or $1.21 on a non-GAAP basis. Analysts’ estimates have been steadily increasing over the past couple of months — at the beginning of September the bank was expected to earn $1.15 per share.
Banks are expected to continue to post weak trading numbers, and low net interest margins could continue to weigh on the sector. But some analysts see hope in the increase in mortgage refinancing by U.S. homeowners taking advantage of low interest rates. Banks could also benefit from higher mortgage originations as the housing market has improved.
“Strong mortgage refinancing demand and gain on sale production margins along with better-than-expected market-sensitive revenues could drive fee income upside” for JPM and large regional banks, wrote RW Baird analyst David George.
KBW analyst Frederick Cannon also expects JP Morgan to show some strength in investment banking.
“We expect Investment Banking fees to improve modestly linked quarter at $1,275 million (up 23% year over year) driven by strong debt underwriting of $700 million ($639 million last quarter),” he wrote.
Earnings may still be “messy,” because of debt valuation adjustments.
Wells Fargo (WFC) will also report earnings before the market opens, and is expected to earn 87 cents per share.
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