JPMorgan Chase Q3 Earnings: What Wall Street Expects

JPMorgan Chase, the leading global financial services firm, is set to report its third-quarter 2024 earnings on October 11. As the economic landscape evolves, investors and analysts are keen to understand how the bank's performance will be affected. This article explores the key expectations and trends to watch for in JPMorgan Chase's Q3 earnings report.

Wall Street analysts anticipate a decline in both revenue and earnings for JPMorgan Chase in Q3. They expect the company to report earnings of $3.99 per share, representing a 7.9% decrease year-over-year. Additionally, revenues are expected to fall by 33% from the year-ago quarter to $41.4 billion, according to data from TipRanks. This decline can be attributed to current economic challenges and the potential impact of falling interest rates on net interest income (NII).

As we head into Q3, it's important to consider the potential impact of falling interest rates on JPMorgan Chase's NII. Like other banks, JPMorgan could see its NII decline as lower rates reduce what the bank earns on loans. NII represents the difference between interest earned on loans and what the bank pays out on deposits. Other factors to watch include sluggish loan growth and rising expenses. JPMorgan's President Daniel Pinto mentioned that the bank's expenses might exceed the earlier $93.7 billion projection due to inflation and continued investments.

Despite these challenges, JPMorgan Chase is a diversified financial giant, well-equipped to navigate reduced NII more effectively than smaller banks. Its broad reach and commitment to underserved communities, with over 300 community-center branches, continue to strengthen its position. Moreover, analysts remain optimistic, expecting that market NII could rise to $2 billion as the Fed cuts rates, offering hope for future recovery.

Options traders anticipate a minor move in JPMorgan Chase's stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. Currently, options traders are expecting a 3.70% move in either direction.

Turning to Wall Street, JPMorgan Chase stock has a Moderate Buy consensus rating based on 13 Buys and five Holds assigned in the last three months. At $224.68, the average JPMorgan price target implies a 6.52% upside potential. Shares of the company have gained 26.97% year-to-date.

As JPMorgan Chase reports its Q3 earnings, investors will be watching closely for clues on how the bank is faring at the start of the Federal Reserve's easing cycle. The bank's performance will provide valuable insights into the broader banking sector's ability to navigate a changing interest rate environment and economic challenges.