JP Morgan Kicks Off Bank Earnings Tomorrow, And Everyone Will Have Three Questions On Their Minds

Jamie dimon justiceREUTERS/Gary CameronJ.P. Morgan CEO Jamie Dimon (front) leaves the U.S. Justice Department after meeting with Attorney General Eric Holder, in Washington, September 26, 2013.

JP Morgan will kick off earnings season for Wall Street banks tomorrow with an announcement at 7:00 am EST followed by a call at 8:30 am.

Analysts are expecting earnings per share to come in at $US1.29, down from $US1.60 in Q2, and revenue of $US23.6 billion, down from $US25.1 billion in Q2, according to data compiled by Bloomberg.

No surprise that analysts are expecting a decline in revenue and EPS. As we’ve heard over and over again, JP Morgan is spending a lot of money on its legal troubles. The bank has said it will put aside an additional $US1.5 billion in its legal reserves.

What observers will be wondering is — is $US1.5 billion enough, and when will this regulatory beat down be over?

Another question on everyone’s mind, according to Shannon Stemm, an analyst at Edward Jones, will be about JP Morgan’s mortgage business.

“We’ll be looking at mortgage banking results closely,” Stemm told Business Insider via e-mail. “While a drop in refinancing activity has been telegraphed and is expected, we’ll be interested in any growth in new purchase activity as well as management’s commentary around housing market health in general. We’ll also be interested in how significantly gain on sale margins compress from recently elevated levels… Additionally, we’ll look to other fee-based businesses, such as custody banking and asset management, as a potential sources to offset weakness in mortgage banking and/or overall sluggishness in net interest income.”

Lastly — and this goes for every bank, — expect a eyes on fixed income, currency and commodity trading. Banks that have reported their numbers so far, like Jefferies and Deutsche Bank, have gotten hit hard. JP Morgan could be no different.

We’ll find out tomorrow bright and early.

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