JPMorgan Chase & Co. ((JPM) Is the largest US bank by asset size and the first bank in the Mega Bank lineup to announce results for the first quarter of this week, when the earnings season begins.
The company has a strong outperform in the banking sector, with concerns over relations between US banks and Russia and concerns about a slowdown, which has led to a significant delay in the overall market this year. Still, JP Morgan’s stock has fallen 15.8% so far.
JP Morgan announced its quarterly financial results on Wednesday. According to analysts surveyed by Bloomberg, the key figures and expectations are:
Revenue (Adjusted): $ 31.59 billion vs. forecast $ 31.44 billion, $ 30.35 billion in the fourth quarter
Profit per share (Adjusted): $ 2.63 per share vs. expected $ 2.72, $ 3.33 per share in Q4
Wednesday’s report is ready to reflect a deadly quarter for banking powers. JP Morgan’s revenue is projected to decline 5% from the same period last year, but analysts expect earnings per share (EPS) to be 40% below the first quarter of 2021.
Some of the key indicators that investors closely monitor are the company’s net interest margin, the difference between the income from a bank’s lending activity and the interest paid to depositors. This figure means that you will benefit from higher interest rates, but if the Federal Reserve raises interest rates too aggressively and goes into recession, JP Morgan’s lending activity could be hit. ..
Banks’ net interest margins are expected to fall 1 basis point from the previous quarter to 1.65%, according to Bloomberg data. Net interest income could decrease by 1% from the fourth quarter, but increase by 5% from the same period last year.
Last year, JP Morgan and his colleagues profited from the release of credit loss allowances during the COVID era to absorb the potential shock that financial institutions accumulated at the start of the pandemic could not repay their debt. However, the financial boost from the reserves that made up the profits in 2021 is expected to diminish. Bloomberg analysts expect reserve releases to be only $ 900 million, compared to $ 1.8 billion in the fourth quarter.
Trading income is expected to decline 21% compared to the first quarter of last year, but investment banking fees are also active during the quarter as geopolitical tensions between Russia and Ukraine and rising interest rates weigh heavily on the market. Will decrease by 24% after the stagnation. ..
JP Morgan CFO Jeremy Burnham warned last quarter by calling reporters of “headwinds” due to higher compensation after banks increased operating expenses by 11% to $ 17.9 billion. In the first quarter report, this figure is expected to increase further to $ 19.5 billion.
“It’s true that the labor market is tight and there is a bit of labor inflation, attracting and retaining the best talent and making competitive payments based on performance,” Burnham said in a bank’s fourth-quarter earnings call. That’s important. “
Following the results of the first quarter, JP Morgan CEO Jamie Dimon is expected to share his views on geopolitical risks and the Fed’s monetary tightening plans.Bank manager Warned in his well-read annual letter to shareholders Earlier this month, Russia’s continued invasion of Ukraine is expected to significantly slow down the US and global economies.
Dimon may also be faced with questions about what he said about JP Morgan’s $ 1 billion loss from the war. He didn’t elaborate on the exact time frame or how to calculate the estimate, but a JP Morgan spokesman told Yahoo Finance after the release of Dimon’s letter that the loss was a potential war-affected distant. He said it could be related to rest assets.
Banks said they were not worried about their direct exposure to Russia, but financial institutions were concerned about the “secondary and collateral impact” of the crisis and sanctions on so many companies and countries.
This post is broken. Please check for updates.
Alexandra Semenova is a Yahoo Finance reporter. Follow her on her Twitter @alexandraandnyc