What to watch from JPM

JPMorgan Chase & Co. (JPM), the largest U.S. bank, is already looking forward to a post-pandemic economy. The bank recently agreed to acquire a large travel and loyalty business, promising that people all over the world will be eager to vacation and travel again.But the bank’s move comes as signs indicate that the pandemic and its effects are far from over: coronavirus cases are reaching records and U.S. job losses are rising.

Investors will be keeping a close eye to see how JPMorgan has overcome the economic downturn from the COVID-19 pandemic when it reports earnings on January 15, 2021 for Q4 FY 2020.Analysts expect earnings per share (EPS) to rise as revenues fall slightly compared to the quarter a year ago.

Investors also focus on the bank’s trading income, both from its bond trading desk and the equity trading desk. Volatility remains high amid the ongoing pandemic, which creates opportunities for traders. Analysts predict strong growth in JPMorgan’s bond trading income as well as equity trading income.

Shares of JPMorgan have weakened the broad market for much of the past year. The 2020 stock started to market but finally fell when stocks bounced back in late March following the pandemic crash that started in late February. It is only since the beginning of November that JPMorgan has started to close the gap with the rest of the market. The bank’s shares have posted a total return of 6.0% over the past 12 months, lower than the S&P 500 total yield of 15.6%.

JPMorgan stock has been largely unaware of its recent quarterly earnings results. The bank posted a 9.0% increase in EPS in Q3 FY 2020, marking its first growth since Q4 FY 2019. Revenue, however, fell 0.5%, the second decline in three quarters.The bank noted that their net income, the difference between the interest it receives on loans and what it pays out on investments, was down almost 9% as resulting in lower interest rates across the economy.

Financial results in Q2 FY 2020 were also mixed. EPS fell 50.9% compared to the same period three months ago, and revenue rose 14.7%. But it was a definite improvement from Q1 FY 2020 when EPS fell 70.4% and revenue fell 3.2%, as the global economy felt the first shocks of the COVID-19 pandemic.

Analysts expect both EPS and revenue growth to be broadly flat in Q4 FY 2020, with EPS expected to rise just 0.7% as revenues decline 0.3% compared to to the quarter a year ago. For full-year 2020 results, analysts predict that EPS will fall 28.3% as revenues grow 2.0%. It was the first EPS decline and the slowest revenue growth in at least four years.