We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Weak Investment Banking to Hurt JPMorgan (JPM) Q1 Earnings
Read MoreHide Full Article
The performance of investment banking, one of the primary sources of revenues for JPMorgan (JPM - Free Report) , is expected to be dismal in first-quarter 2019. Hence, this might have an adverse impact on the bank’s results, scheduled to be announced on Apr 12.
Investment banking income basically comprises underwriting revenues (equity and debt) and advisory fees (generated from M&A deals and IPOs). So, let’s check how these are likely to have performed in the to-be-reported quarter.
Prolonged government shutdown at the beginning of the quarter and fears of economic slowdown weighed on companies’ plans to raise capital by issuing shares. Thus, JPMorgan’s equity underwriting fees are expected to be soft.
Further, higher interest rates are likely to have slowed down companies’ involvement in debt issuance activities. As debt origination fees account for about half of total investment banking fees for JPMorgan, this is expected to have an adverse impact on investment banking revenues to some extent.
Therefore, JPMorgan’s equity and debt underwriting fees (accounting for almost 60% of total investment banking fees) are expected to be affected, while its top position in the market may offer some respite.
Now coming to advisory fees, it is also not expected to be a great support to JPMorgan’s top line in the to-be-reported quarter. While dealmakers across the globe were active during the first quarter, global deal value and volume witnessed a fall due to higher borrowing costs and several geopolitical concerns.
Likewise, given the government shutdown and geopolitical ambiguity, IPO activities slowed down despite decent equity market performance during the quarter. So, these factors will have an adverse impact on JPMorgan’s advisory fees. Nevertheless, the bank's top position in garnering global investment banking fees will likely provide some leverage.
Notably, the consensus estimate for total banking revenues (of which investment banking revenues constitute a major portion) of $3.13 billion indicates 4.2% increase from the prior-year quarter.
Overall Earnings & Revenue Projections
Notably for JPMorgan, the Zacks Consensus Estimate for earnings of $2.32 reflects a 2.1% decrease on a year-over-year basis. However, the consensus estimate for sales of $28 billion indicates a marginal rise.
Click here to know about the other factors that are likely to influence the bank’s overall results.
Our Take
A tough operating environment and disappointing investment banking performance are expected to adversely impact JPMorgan’s top line to an extent. Further, dismal mortgage banking and trading remain concerns. Nonetheless, decent loan growth and higher rates will aid this Zacks Rank #4 (Sell) stock’s revenues.
Wells Fargo (WFC - Free Report) is slated to announce results on Apr 12, while Citigroup (C - Free Report) and Bank of America (BAC - Free Report) will come out with the quarterly numbers of Apr 15 and Apr 16, respectively.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
Image: Bigstock
Weak Investment Banking to Hurt JPMorgan (JPM) Q1 Earnings
The performance of investment banking, one of the primary sources of revenues for JPMorgan (JPM - Free Report) , is expected to be dismal in first-quarter 2019. Hence, this might have an adverse impact on the bank’s results, scheduled to be announced on Apr 12.
Investment banking income basically comprises underwriting revenues (equity and debt) and advisory fees (generated from M&A deals and IPOs). So, let’s check how these are likely to have performed in the to-be-reported quarter.
Prolonged government shutdown at the beginning of the quarter and fears of economic slowdown weighed on companies’ plans to raise capital by issuing shares. Thus, JPMorgan’s equity underwriting fees are expected to be soft.
Further, higher interest rates are likely to have slowed down companies’ involvement in debt issuance activities. As debt origination fees account for about half of total investment banking fees for JPMorgan, this is expected to have an adverse impact on investment banking revenues to some extent.
Therefore, JPMorgan’s equity and debt underwriting fees (accounting for almost 60% of total investment banking fees) are expected to be affected, while its top position in the market may offer some respite.
Now coming to advisory fees, it is also not expected to be a great support to JPMorgan’s top line in the to-be-reported quarter. While dealmakers across the globe were active during the first quarter, global deal value and volume witnessed a fall due to higher borrowing costs and several geopolitical concerns.
Likewise, given the government shutdown and geopolitical ambiguity, IPO activities slowed down despite decent equity market performance during the quarter. So, these factors will have an adverse impact on JPMorgan’s advisory fees. Nevertheless, the bank's top position in garnering global investment banking fees will likely provide some leverage.
Notably, the consensus estimate for total banking revenues (of which investment banking revenues constitute a major portion) of $3.13 billion indicates 4.2% increase from the prior-year quarter.
Overall Earnings & Revenue Projections
Notably for JPMorgan, the Zacks Consensus Estimate for earnings of $2.32 reflects a 2.1% decrease on a year-over-year basis. However, the consensus estimate for sales of $28 billion indicates a marginal rise.
JPMorgan Chase & Co. Price and EPS Surprise
JPMorgan Chase & Co. Price and EPS Surprise | JPMorgan Chase & Co. Quote
Click here to know about the other factors that are likely to influence the bank’s overall results.
Our Take
A tough operating environment and disappointing investment banking performance are expected to adversely impact JPMorgan’s top line to an extent. Further, dismal mortgage banking and trading remain concerns. Nonetheless, decent loan growth and higher rates will aid this Zacks Rank #4 (Sell) stock’s revenues.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Schedules of Other Big Banks
Wells Fargo (WFC - Free Report) is slated to announce results on Apr 12, while Citigroup (C - Free Report) and Bank of America (BAC - Free Report) will come out with the quarterly numbers of Apr 15 and Apr 16, respectively.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>