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Muted Investment Banking to Hurt JPMorgan (JPM) in Q2 Earnings
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JPMorgan’s (JPM - Free Report) investment banking (“IB”) fees, one of the main sources of its revenues, are not expected to have witnessed growth in second-quarter 2023. Poor IB performance will, thus, not likely provide much support to the bank’s results scheduled to be announced on Jul 14.
IB income comprises advisory fees (generated from M&As and business restructuring) and underwriting revenues (equity and debt). Let’s check how these are expected to have fared in the to-be-reported quarter.
While green shoots were visible toward the end of the second quarter, global deal-making continued to shrink on a year-over-year basis. A host of factors like geopolitical tensions, stand-off over the U.S. debt ceiling, concerns over inflation, rising interest rates and fears of a global recession acted as major headwinds.
Thus, deal volume and total deal value numbers crashed in the second quarter. Notably, JPMorgan’s leadership in the space is also not expected to have offered much support to advisory fees.
For similar reasons, IPOs and follow-up equity issuances dried up in the to-be-reported quarter. Bond issuance volume was also muted as investors turned pessimistic. Hence, JPMorgan’s underwriting fees (accounting for almost 60% of total IB fees) are expected to have been hurt in the June-ended quarter.
The consensus estimate for second-quarter investment banking revenues is pegged at $1.58 billion. Our estimate for the metric is pinned at $1.42 billion.
Q2 Earnings & Sales Projections
The Zacks Consensus Estimate for JPM’s second-quarter earnings has been revised almost 1% north to $3.66 over the past seven days. The estimated number indicates a jump of 32.6% from the year-ago reported number. Our estimate for earnings is pegged at $3.50.
Also, the consensus estimate for sales of $37.03 billion suggests a 20.6% year-over-year rise. Our estimate for sales is pegged at $36.63 billion, implying growth of 19.3%.
Click here to know about the other factors that are likely to have influenced JPM’s overall performance in the quarter under review.
Our Viewpoint
JPM is expected to have benefited from higher interest rates in the second quarter. However, the not-so-impressive trading and IB performances are likely to have hurt the Zacks Rank #2 (Buy) stock’s top-line growth.
Similar to JPM, IB revenues constitute a major part of total revenues of banks like Bank of America (BAC - Free Report) and Morgan Stanley (MS - Free Report) .
BAC and MS will report quarterly results on Jul 18.
BAC expects IB revenues in the second quarter of 2023 to be broadly flat on a year-over-year basis.
For MS, its management expects a year-over-year decline in IB revenues in the quarter.
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Muted Investment Banking to Hurt JPMorgan (JPM) in Q2 Earnings
JPMorgan’s (JPM - Free Report) investment banking (“IB”) fees, one of the main sources of its revenues, are not expected to have witnessed growth in second-quarter 2023. Poor IB performance will, thus, not likely provide much support to the bank’s results scheduled to be announced on Jul 14.
IB income comprises advisory fees (generated from M&As and business restructuring) and underwriting revenues (equity and debt). Let’s check how these are expected to have fared in the to-be-reported quarter.
While green shoots were visible toward the end of the second quarter, global deal-making continued to shrink on a year-over-year basis. A host of factors like geopolitical tensions, stand-off over the U.S. debt ceiling, concerns over inflation, rising interest rates and fears of a global recession acted as major headwinds.
Thus, deal volume and total deal value numbers crashed in the second quarter. Notably, JPMorgan’s leadership in the space is also not expected to have offered much support to advisory fees.
For similar reasons, IPOs and follow-up equity issuances dried up in the to-be-reported quarter. Bond issuance volume was also muted as investors turned pessimistic. Hence, JPMorgan’s underwriting fees (accounting for almost 60% of total IB fees) are expected to have been hurt in the June-ended quarter.
The consensus estimate for second-quarter investment banking revenues is pegged at $1.58 billion. Our estimate for the metric is pinned at $1.42 billion.
Q2 Earnings & Sales Projections
The Zacks Consensus Estimate for JPM’s second-quarter earnings has been revised almost 1% north to $3.66 over the past seven days. The estimated number indicates a jump of 32.6% from the year-ago reported number. Our estimate for earnings is pegged at $3.50.
JPMorgan Chase & Co. Price and EPS Surprise
JPMorgan Chase & Co. price-eps-surprise | JPMorgan Chase & Co. Quote
Also, the consensus estimate for sales of $37.03 billion suggests a 20.6% year-over-year rise. Our estimate for sales is pegged at $36.63 billion, implying growth of 19.3%.
Click here to know about the other factors that are likely to have influenced JPM’s overall performance in the quarter under review.
Our Viewpoint
JPM is expected to have benefited from higher interest rates in the second quarter. However, the not-so-impressive trading and IB performances are likely to have hurt the Zacks Rank #2 (Buy) stock’s top-line growth.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Competitive Landscape
Similar to JPM, IB revenues constitute a major part of total revenues of banks like Bank of America (BAC - Free Report) and Morgan Stanley (MS - Free Report) .
BAC and MS will report quarterly results on Jul 18.
BAC expects IB revenues in the second quarter of 2023 to be broadly flat on a year-over-year basis.
For MS, its management expects a year-over-year decline in IB revenues in the quarter.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.