JPM Earnings Preview: What investors need to know

JPMorgan Chase (JPM), the largest U.S. bank by assets, is set to report its Q4 2024 earnings on Wednesday, January 15, before the opening bell. Analysts expect the bank to deliver adjusted earnings per share (EPS) of $4.10, representing a 23.8% year-over-year (YoY) growth. Revenue is forecasted at $41.94 billion, up 1.41% from the prior quarter and 7.5% YoY. Net income is projected to grow 20.2% YoY to $11.67 billion, with a robust return on equity (ROE) of 14.12%. These results are expected to underscore JPMorgan’s resilience amid a challenging macroeconomic environment.

A key driver for Q4 performance is the strength in the bank’s capital markets revenue, as investment banking fees are anticipated to rise 45% YoY, and trading revenue is projected to grow in the mid-teens. However, net interest income (NII) is expected to decline to $22.93 billion from $24.05 billion a year ago, reflecting higher deposit costs in the current interest rate environment. Still, JPMorgan’s diversified revenue streams, including growth in asset management and consumer spending, are expected to mitigate this impact.

JPMorgan has consistently outperformed expectations, delivering earnings beats in eight consecutive quarters. This track record highlights the bank’s ability to navigate economic uncertainty and capitalize on its industry-leading position. Analysts also anticipate commentary from CEO Jamie Dimon on the economic outlook, particularly regarding interest rate trends and geopolitical risks, as well as updates on the bank’s succession planning.

The bank’s valuation remains a focal point for investors. JPMorgan trades at approximately 13x 2024 EPS, which is a premium compared to peers like Bank of America and Citigroup. However, the premium is justified by JPMorgan’s superior ROE and return on tangible common equity (ROTCE), as well as its dominant position in both consumer and corporate banking.

Another key area of focus will be guidance for 2025. Analysts are forecasting a modest decline in full-year EPS and revenue, reflecting expectations for normalization in credit and capital markets. However, JPMorgan has consistently exceeded conservative forecasts, and any upward revision to net interest income or capital markets expectations could serve as a positive catalyst for the stock.

As JPMorgan reports, attention will also be on broader trends for the banking sector, including loan loss provisions, credit quality, and the potential for regulatory changes under the next administration. With its well-capitalized balance sheet and diverse revenue streams, JPMorgan is well-positioned to lead the sector, even as it prepares for potential changes in leadership with CEO Jamie Dimon’s eventual departure. The bank’s results will likely set the tone for its peers, who are also set to report later this week.

JPMorgan provided an optimistic outlook at last month’s Barclays Financial Services conference, highlighting several key growth drivers for the upcoming quarters. Investment banking fees are expected to surge by 45% year-over-year in Q4, with trading revenues projected to rise by mid-teens or more compared to the prior year. The bank noted that its net interest income outlook has solidified, with 2025 NII anticipated to be approximately $2 billion higher than current levels. JPMorgan has successfully retained 90% of First Republic's banking clients, with the integration largely complete. Additionally, the bank forecasts modest deposit growth in 2025, strengthening holiday consumer spending, and increasing corporate client confidence. JPMorgan's leadership also expressed optimism about a pro-growth regulatory environment under a potential new administration.

JPMorgan Chase reported strong Q3 earnings, exceeding analyst expectations on several key metrics. The bank posted an EPS of $4.37, outperforming estimates, while adjusted revenue rose 6.5% year-over-year to $43.32 billion, surpassing the $41.9 billion forecast. Managed net interest income came in at $23.53 billion, higher than the estimated $22.8 billion. Investment banking revenue was a standout, rising 29% year-over-year to $2.35 billion, driven by a surge in fees. Additionally, loans and deposits exceeded projections, further bolstering investor confidence and leading to a 4.3% rise in the stock price post-earnings.

The Consumer & Community Banking (CCB) segment saw mixed performance. Revenue declined 3% year-over-year to $17.79 billion, impacted by lower net interest income due to deposit margin compression. However, home lending revenue increased 3%, and Card Services & Auto revenue rose 11%, reflecting higher interest income on revolving balances. On the corporate side, the Commercial & Investment Bank (CIB) segment showed strength, with an 8% increase in revenue to $17.02 billion and a 13% rise in net income. Investment banking fees jumped 31% year-over-year, surpassing the growth expectations shared during recent investor conferences.

The bank's credit quality remained stable, although provisions for credit losses increased to $3.11 billion, slightly above estimates. Net charge-offs, however, were lower than anticipated at $2.09 billion, suggesting resilience in consumer credit. The CFO highlighted that credit card charge-offs are normalizing, with only a slight expected uptick ahead. JPMorgan also noted stable deposit volumes, which it expects to remain flat for the remainder of the year. The bank's increased buybacks, supported by gains from a Visa transaction, added further value for shareholders.

CEO Jamie Dimon provided a cautious macroeconomic outlook, citing geopolitical tensions, fiscal deficits, and infrastructure challenges as ongoing risks, despite easing inflation and a resilient U.S. economy. He emphasized the value of cash as an asset in a turbulent environment, underscoring the bank’s preparedness for potential disruptions. Dimon also addressed questions about his potential role in government, stating he is unlikely to leave his current position.

JPMorgan raised its full-year 2024 net interest income guidance to $92.5 billion, reflecting optimism about its performance trajectory. At the same time, the bank lowered its adjusted expense outlook to $91.5 billion, signaling disciplined cost management. With a return on equity of 16% and a return on tangible common equity of 19%, JPMorgan continues to outperform peers, trading at a premium valuation of 2.22 times its tangible book value. This strong report bodes well for the broader banking sector, setting a positive tone for upcoming earnings.