Back to top

Image: Bigstock

Lower Trading Volumes to Hurt JPMorgan's (JPM) Q1 Earnings

Read MoreHide Full Article

After an impressive 2018 performance driven by significant volatility and higher volumes, client activity slowed down in first-quarter 2019. Therefore, JPMorgan’s (JPM - Free Report) trading revenues (constituting almost 20% of its top line) are expected to be hurt and will also have an adverse impact on its results slated on Apr 12, before market open.

During the first quarter, several concerns, including a few lingering ones from the prior quarters like uncertainty related to Brexit and U.S.-China trade war, and expectations of global economic slowdown continued. However, these were not enough to result in a substantial increase in client activity and volumes.

Further, during the Investors Day conference in February, management projected a dismal trading picture. The company expects markets revenues to fall in the "high teens" percentage, against an unusually strong quarter a year ago. Fall in the currencies and emerging markets units might be the primary reasons.

The Zacks Consensus Estimate for equity trading revenues of $1.61 billion reflects a decline of 20% from the prior-year quarter. Also, the consensus estimate of $4.20 billion for fixed income trading revenues reflects 7.8% fall.

Earnings & Revenue Expectations

For JPMorgan, the Zacks Consensus Estimate for earnings of $2.32 reflects 2.1% decline on a year-over-year basis. The consensus estimate for sales of $28 billion indicates a 0.1% 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 JPMorgan’s overall results.


During the first quarter, the operating backdrop was decent. Modest loan growth, inflows in asset management division and higher rates will likely support this Zacks Rank #3 (Hold) stock’s revenue growth (to some extent). However, lower trading revenues along with dismal mortgage banking business and muted growth in investment banking are expected to hamper growth.

(You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.)

Trading Revenue Expectations for Other Companies

Among the other companies, trading revenues are a major portion of total revenues for Bank of America (BAC - Free Report) , Citigroup (C - Free Report) and Morgan Stanley (MS - Free Report) . Like JPMorgan, dismal trading performance will likely hurt these banks’ revenues and earnings in the first quarter.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?

Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.

See Latest Stocks Today >>

More from Zacks Analyst Blog

You May Like