KBW Offers Analysis Ahead of Mobile Payments Field Competitor JP Morgan Chase Earnings Report

October 22, 2019         By: Steven Anderson

Third quarter earnings reports are still making their presence known, and with the holiday shopping season approaching, most are likely wondering which companies—especially in terms of mobile payments—are looking the strongest going into this major event. The folks at Keefe, Bruyette & Woods (KBW) sent word our way recently about one such entrant: JP Morgan Chase (JPM).

The initial word for JPM isn’t exactly good, the KBW report notes, though it could be much worse. The immediate issue is that consensus estimates for third quarter 2019 will not be met. It will be close, however, expected to come in at $2.44 rather than the estimates’ $2.45.

The third quarter prompted KBW analysts to take a closer look at loan and deposit growth, along with other factors like the repo market and recent IPO performances, as well as certain macroeconomic conditions.

Loan growth was expected to be “modest”, which isn’t that great of news but not bad either. Average loans were up 3.4 percent year to year based on Fed data, and KBW expects growth around the 0.5 percent level. Net interest income was expected to be down slightly thanks to a decrease in long-term rates presented over the quarter. It also expects lower reinvestment rates and an increase in prepayments for mortgage-backed securities.

Investment banking will likely also be somewhat tepid, as it will be at other banks, where most measures will either match or drop against the previous year’s figures. Trading revenues, meanwhile, are expected to be flat or close to it.

Essentially, the third quarter looks like it will either be flat or slightly short, which when talking about the third quarter in general is regarded as a good move. The third quarter is usually the short one; remember how “The Simpsons” once presented a department store’s revenues: the summer featured the “Mom-Dad-Grad Gift Corridor” and the winter presented the “Christmashanukwanzaa Spend Phase,” but between the two was the “usual summer lull,” which might have better been described as the “fall lull.”

The third quarter often has little to recommend it, and JP Morgan’s results are likely to show as much, based on the word from KBW. Still though, it’s likely to still be a major part of mobile payments movement for some time to come.