JPMorgan Chase posts record revenue on higher interest rates; shares jump 7%

Finance

Jamie Dimon, chairman and chief executive officer of JPMorgan Chase & Co., during a Bloomberg Television interview at the JPMorgan Global High Yield and Leveraged Finance Conference in Miami, Florida, US, on Monday, March 6, 2023.
Marco Bello | Bloomberg | Getty Images

JPMorgan Chase is scheduled to report first-quarter earnings before the opening bell Friday.

Here’s what Wall Street expects:

  • Earnings: $3.41 per share, 29.7% higher than a year earlier, according to Refinitiv.
  • Revenue: $36.24 billion, 14.7% higher than a year earlier.
  • Deposits: $2.31 trillion, according to StreetAccount.
  • Provision for credit losses: $2.27 billion.
  • Trading Revenue: Fixed income $5.29 billion, Equities $2.86 billion.

JPMorgan, the biggest U.S. bank by assets, will be watched closely for clues on how the industry fared after the collapse of two regional lenders last month.

Analysts expect a mixed bag of conflicting trends. For instance, JPMorgan likely benefited from an influx of deposits after Silicon Valley Bank and Signature Bank experienced fatal bank runs.

But the industry has been forced to pay up for deposits as customers shift holdings into higher-yielding instruments like money market funds. That will probably curb banks’ gains from rising interest rates amid the Federal Reserve’s efforts to tame inflation.

The flow of deposits through American financial institutions is the top concern of analysts and investors this quarter. That’s because smaller banks faced pressure last month as customers sought the perceived safety of megabanks including JPMorgan and Bank of America. But the bigger picture may be that deposits are leaving the regulated banking system overall as customers realize they can earn higher yields outside checking and saving accounts.

Another key question will be whether JPMorgan and others are tightening lending standards ahead of an expected U.S. recession, which could constrict economic growth this year by making it harder for consumers and businesses to borrow money.

Banks have begun setting aside more loan loss provisions on expectations for a slowing economy later this year, and that could weigh on results. JPMorgan is expected to post a $2.27 billion provision for credit losses, according to the StreetAccount estimate.

Wall Street may provide little help this quarter, with investment banking fees likely to remain subdued thanks to the still-shut IPO market. CFO Jeremy Barnum said in February that investment banking revenue was headed for a 20% decline from a year earlier, and that trading was trending “a little bit worse” as well.

Finally, analysts will want to hear what JPMorgan CEO Jamie Dimon has to say about the economy and his expectations for how the regional banking crisis will develop. JPMorgan has played a central role in propping up a client bank, First Republic, which teetered last month, in part by leading efforts to inject it with $30 billion in deposits.

Shares of JPMorgan are down about 4% this year, outperforming the 31% decline of the KBW Bank Index.

Wells Fargo and Citigroup are scheduled to release results later Friday, while Goldman Sachs and Bank of America report Tuesday and Morgan Stanley discloses results Wednesday.

This story is developing. Please check back for updates.

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