KBW Talks Mobile Payments, Financial Firm JP Morgan Chase Figures Ahead of Release

July 16, 2019         By: Steven Anderson

JP Morgan Chase (JPM) is a pretty major name when it comes to fintech, which means it plays a certain role in the mobile payments front as well. Just ahead of the announcement on its second quarter results, the folks at Keefe, Bruyette and Woods (KBW) dropped word our way about its own expectations ahead of the release.  The good news, or at least comparatively so, is that no major land mines seem to be in the path ahead for JPM.

There wasn’t much good news to be had in KBW’s predictions, but there wasn’t a lot of terrible news either. One of the biggest points was that KBW expects JPM’s loan growth to slow somewhat, a drop of 1.5 percent for EOP loans, and an average loan drop of 3.1 percent as compared to the previous quarter. This is pinned on a slower overall growth rate for both mortgage and wholesale loans.

Additionally, there was a slight punch in the net interest income (NII) segment. KBW expected a 2.3 percent drop on that front, which would have brought NII to a still-staggering $14.2 billion. This drop will be brought about by lower LIBOR rates, as well as a slowdown in long-term rates, KBW noted. Additionally, an increase in nonperforming loans as well as expectations of lowered interest rates from central banks will serve as a further drag on the overall market.

Just to round it out, KBW also expects a drop in trading revenues, as for “median Universal banks,” KBW expects a loss in FICC trading revenues of about five percent and an equities trading reduction of 3.5 percent.

No part of this is exactly what you’d call good news. By like token, though, it’s not exactly bad news either. There’s no cataclysm here, no catastrophe, no danger that JP Morgan and Chase won’t survive as an entity to see the next Presidential election. There might be some layoffs in the face of reduced earnings, and that is bad news for those involved, but the company itself should hold out. Cold comfort to the laid-off, but still.

So yes, a fair summary of the KBW note could be “it could be worse.” Only time will tell, though, if it actually is.