JPMorgan shares jump after record trading revenue drives stronger-than-expected second quarter profit

Jamie Dimon, chief executive officer of JPMorgan Chase & Co.

Giulia Marchi | Bloomberg | Getty Images

JPMorgan Chase is scheduled to report second-quarter earnings before the opening bell on Tuesday.

Here’s what Wall Street expects:

  • Earnings: $1.04 per share, a 63% decline from a year earlier, according to Refinitiv.
  • Revenue: $30.3 billion, 2.5% higher than a year earlier.
  • Net interest margin: 2.23%, according to FactSet
  • Trading revenue: Fixed income $5.84 billion, equities $2.07 billion

JPMorgan, the biggest U.S. bank by assets, is also the first major lender to report earnings. The company will be closely watched for clues on how the coronavirus pandemic is impacting banks’ retail and institutional businesses.

The key question investors have is whether the second quarter will represent the nadir for bank profits this year: Big banks are expected to show the largest loan loss provision for any quarter since the financial crisis because of the pandemic, according to analyst Jason Goldberg of Barclays.

The fate of the industry is tied closely to the path of the coronavirus because the unemployment caused by states shutting down their economies impacts the abilities of customers to repay debts.

JPMorgan CEO Jamie Dimon said in May that the odds were “pretty good” that the economy would rebound in the second half of the year, driven by the reopening. But that scenario could be threatened by the recent progression of the coronavirus, which has already forced some states to reverse course and shutter businesses again.

A bright spot for the industry has been trading, which has benefited from surging volatility and the Federal Reserve’s unprecedented actions to prop up credit markets. At JPMorgan, the bank’s trading division was headed for a revenue increase of more than 50% compared with the year earlier, co-President Daniel Pinto said in late May.

While bank stocks have rebounded from their March lows, they have underperformed the broader indices, which have been buoyed by the roaring technology sector.

One factor keeping bank stocks down: Low interest rates have pressured net interest margin, a key measure of profitability in the banking sector. The industry’s loan books have also begun to shrink, driven in part by lower credit-card usage and the fear of rising defaults.

This story is developing. Please check back for updates.

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