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JPMorgan (NYSE: JPM) is scheduled to kick-start third-quarter 2024 earnings on Oct. 11. The largest American bank's earnings draw a lot of attention because of its presence in almost all the finance sector businesses. This, thus, offers insight into how the quarterly performance of other banks is likely to be.
JPMorgan's close peers – Bank of America (NYSE: BAC) and Citigroup (NYSE: C) are slated to announce their quarterly numbers on Oct. 15.
JPM's second-quarter performance was impressive despite industry-wide operating challenges. This time, we believe the company's performance will likely remain robust. The Zacks Consensus Estimate for third-quarter revenues of $41.01 billion suggests 2.9% year-over-year growth.
On the other hand, rising provisions for credit losses and higher operating expenses are likely to have hampered JPMorgan's bottom-line growth. In the past seven days, the consensus estimate for earnings for the to-be-reported quarter has been revised marginally lower to $4.04, indicating a 6.7% decline from the prior-year quarter.
Estimate Revision Trend
Image Source: Zacks Investment Research
JPMorgan has an impressive earnings surprise history. The company's earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, with an average beat being 8.38%.
Earnings Surprise History
Image Source: Zacks Investment Research
Major Factors to Impact JPMorgan's Q3 Performance
Net Interest Income: On Sept. 18, the Federal Reserve cut the interest rates by 50 basis points to 4.75-5% for the first time since March 2020. Nonetheless, the development is not expected to have much impact on JPMorgan's net interest income (NII) during the third quarter.
Further, relatively higher rates might have hurt NII growth prospects because of elevated funding/deposit costs and an inverted yield curve during the major part of the quarter.
Yet, clarity on the Fed's rate cut path and the stabilizing macroeconomic backdrop are likely to have provided support to the lending scenario. Per the Fed's latest data, the demand for commercial and industrial, real estate and consumer loans was modest in the first two months of the quarter.
The Zacks Consensus Estimate for NII (reported) of $22.57 billion suggests a slight decline on a year-over-year basis. Our estimate for NII implies a fall of almost 1% to $22.55 billion.
Investment Banking (IB) Fees: Global mergers and acquisitions (M&As) in the third quarter of 2024 showed marked improvement after subdued 2023 and 2022. This is expected to ...
