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Rise in Trading Activities to Aid JPMorgan (JPM) Q4 Earnings

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After disappointing performance in the first three quarters of 2019 due to low level of client activities, JPMorgan’s (JPM - Free Report) trading revenues (constituting nearly 20% of its top line) are likely to have improved in the fourth quarter. The reversal in trend is expected to support the bank’s results slated on Jan 14.

Ambiguity over the U.S.-China trade conflict and Brexit, expectations of global economic downturn, the Federal Reserve’s accommodative stance and a number of happenings in the latter part of the fourth quarter along with strong domestic economy kept trading desks busy and resulted in a rise in client activities.

Solid equity markets performance resulted in an increase in equity trading while settlement of a few macroeconomic and geopolitical concerns aided fixed income trading. Therefore, overall growth in trading revenues is likely to have been decent in the to-be-reported quarter.

During an investor conference in December, JPMorgan’s CFO Jennifer Piepszak had stated that trading revenues in the fourth quarter are expected to be up “meaningfully” year over year, with gains largely driven by fixed income operation. It is to be noted that in the year-ago quarter, the company’s fixed-income trading revenues were at the lowest levels since the financial crisis.

Thus, trading revenues are likely to have been robust during the to-be-reported quarter. The Zacks Consensus Estimate for equity trading revenues of $1.38 billion suggests a rise of 5% from the prior-year reported figure. The consensus estimate for fixed income trading revenues indicates increase of 40% year over year to $2.60 billion.

Earnings & Revenue Expectations

For JPMorgan, the Zacks Consensus Estimate for earnings of $2.32 indicates 17.2% growth on a year-over-year basis. Also, the consensus estimate for sales of $27.3 billion suggests a 4.4% increase.

JPMorgan Chase & Co. Price and EPS Surprise


JPMorgan Chase & Co. Price and EPS Surprise

JPMorgan Chase & Co. price-eps-surprise | JPMorgan Chase & Co. Quote

Click here to know about the other factors that are likely to influence the bank’s overall performance.


During the fourth quarter, the operating backdrop was challenging. Low loan demand and lower interest rates are likely to have hurt this Zacks Rank #2 (Buy) stock’s revenue growth (to some extent). However, solid trading revenues along with strong mortgage banking business and decent investment banking performance are likely to have offered support.

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

Trading Revenue Expectations for Other Players

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, impressive trading performance is likely to have provided support to these banks’ revenues and earnings in the fourth quarter.

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