Jamie Dimon, CEO of JP Morgan Chase, will appear in CNBC's Squawk Box at the 2020 World Economic Forum in Davos, Switzerland on January 22nd, 2020.
Adam Galica | CNBC
JPMorgan Chase is expected to post third-quarter earnings ahead of Tuesday's opening bell.
Here's what Wall Street expects:
Earnings: $ 2.23 per share, down 17% year over year, according to Refinitiv.
Revenue: $ 28.3 billion, down 5.9% year over year.
Reserve build: $ 104 million, according to FactSet
Trading Revenue: Fixed Income $ 4.53 billion, equities $ 1.67 billion
JPMorgan, the largest US bank by assets, is also the first major lender to post profits. The company is being watched closely for clues as to how banks are weathering the effects of the coronavirus pandemic.
The key question for the third quarter is whether American banks will show that they are largely done setting up money for loan defaults related to the pandemic.
JPMorgan alone added more than $ 15 billion to loan reserves in the first half, leaving $ 32 billion for expected defaults at the end of June. Analysts believe the company will set aside a much smaller amount for losses in the third quarter.
For example, Barclays analyst Jason Goldberg wrote in a note last week that he expected the bank to build reserves of $ 857 million in the third quarter, less than 10% of what the bank set aside in the previous quarter.
The fate of the industry is closely tied to the pandemic, as unemployment and business disruptions caused by the virus affect the ability of customers and companies to repay debt.
Analysts also expect JPMorgan to post costs tied to the company's record $ 920 million bill to resolve federal investigations into its role in manipulating the global metals and government bond markets.
Despite this reputational damage, trading has been a ray of hope for banks that have benefited from rising volatility and unprecedented actions by the Federal Reserve to support credit markets. At JPMorgan, the bank's commercial division was aiming for a 20% year-over-year increase in sales, CFO Jennifer Piepszak said at a conference last month.
JPMorgan stocks are down 27% through Monday this year, but banks may be due for recovery. The KBW Bank Index is down 30% this year, the largest performance gap compared to the S&P 500 Index in at least 80 years, as Barclays found last week.
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