Multinational investment bank and financial services company JPMorgan Chase & Co. (NYSE: JPM) is all set to release its results for the second quarter of 2022 on July 14, before the market opens. Improving loan demand, rising trading volume, modest credit losses and increasing rates may have provided support to the to-be-reported quarter.
However, a slowdown in M&As, high expenses, decreased IPO releases and other capital raising activities during the quarter could have impacted JPM’s second-quarter earnings. Also, recession fears and high inflation levels could have hurt the company’s financials in the June quarter.
In the first quarter, JPMorgan’s earnings stood at $2.63 per share, lagging analysts’ expectations of $2.72 per share. The metric declined 41.6% from $4.50 on a year-over-year basis. Adjusted revenues for the first-quarter were down 5% year-over-year to $31.59 billion but surpassed estimates of $31.44 billion.
Now, let’s take a look at analysts’ expectations and the factors that could have influenced the company’s second-quarter results.
Analysts Have Mixed Feelings for JPMorgan’s Q2 Results
For the second quarter of 2022, analysts expect the company to post earnings $2.92 per share. The company had reported earnings of $3.78 per share in the second quarter of 2021.
Meanwhile, consensus revenue estimates stand at $31.74 billion, slightly higher than $30.48 billion reported a year ago.
Key Catalysts for Q2 Earnings
During the quarter, the leading financial services firm took several cost management initiatives, whose positive impact should be visible in the to-be-reported quarter.
Further, the bank is expected to ride on interest rate hikes, robust loan demand and increased trading volumes attributed to highly volatile markets.
However, a surge in mortgage rates during the June quarter might have impacted JPMorgan’s mortgage banking income. Notably, interest rates on home loans nearly touched a 14-year-high mark in June.
Meanwhile, the company’s financials in the to-be-reported quarter could reflect the impact of rising expenses and a slowdown in its investment banking business.
JPM’s Reputation at Stake
In its recent report, The Wall Street Journal highlighted that some of JPMorgan’s former precious-metals traders are being investigated by the prosecutors of the U.S. Justice Department.
These traders are alleged to be involved in a price-manipulation method, called spoofing, over a period of seven years. Spoofing was implemented to successfully execute trading orders in precious metals for large hedge funds who paid huge fees. The traders allegedly placed orders at a high or low price and later on cancelled them to reach the desired price level.
Although, this recent news may not have any impact on JPMorgan’s to-be-reported numbers, it can definitely dent the bank’s reputation.
Wall Street is Cautiously Optimistic about JPM Stock
According to TipRanks, the Street is cautiously optimistic about JPM stock and has a Moderate Buy consensus rating based on 11 Buys, six Holds and two Sells. JPM’s average price forecast of $150.67 implies 33.5% upside potential to current levels. Shares of the company have declined 28.6% so far this year.
TipRanks data shows that financial bloggers are 82% Bullish on JPM, compared to the sector average of 67%.
Key Takeaway for JPM’s Stakeholders
JPMorgan’s earnings release will be interesting to watch, as its results can set the tone for the rest of the financial sector. The second-quarter of 2022 did witness adverse macroeconomic conditions, but robust loan demand, increasing trading activities and rising benchmark rates should lend strength to the company’s second-quarter results.
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