JPMorgan Chase share price: 5 things to watch for in Q1 results
The financial institution has to answer five vital questions for investors before its Q1 earnings report.
JPMorgan Chase’s first quarter (Q1) results will be watched by investors. Here are five questions that the financial institution will have to answer before JP Morgan Chase’s Q1 earnings.
Will lowered expectations hurt JPMorgan Chase's Q1 earnings?
Chase chief executive officer(CEO), Jamie Dimon, said in a letter to shareholders that he expects JPMorgan Chase’s Q1 revenue to decrease in 2019, but ironically, it will be for a good reason. Dimon said JPMorgan Chase’s Q1 earnings will likely decrease as the bank will increase expenses to expand locations in more states, build a new headquarters, and invest in hiring thousands of new workers.
The financial institution also has weaker-than-expected estimates for JPMorgan Chase’s Q1 profits because of currency declines. Investors will monitor JPMorgan Chase’s Q1 revenue to see how the bank will be impacted by diminished expectations.
Will a digital coin help JPMorgan Chase's Q1 earnings?
JPMorgan Chase recently announced that it would be the first major US bank to offer its own digital coin. The financial institution hopes that the addition of the electronic currency will help drive JP Morgan Chase’s Q1 revenue. JPM Coin will be similar to a cryptocurrency, but will used privately in contrast to the public use of bitcoin. Chase touted the new currency and blockchain when the bank launched the coin.
‘We have always believed in the potential of blockchain technology and we are supportive of cryptocurrencies as long as they are properly controlled and regulated. As a globally regulated bank, we believe we have a unique opportunity to develop the capability in a responsible way with the oversight of our regulators,’ said a Chase spokesperson.
The bank’s transition into digital currency could possibly have an influence on JPMorgan Chase’s Q1 earnings.
Will global economic factors influence JPMorgan Chase’s Q1 profits?
Global economics had an effect on US banks and Chase is no exception. The bank wants to expand into China, but the US-China trade deal discussions complicated that deal. Dimon noted that he hopes a trade deal can be made, but there could be serious repercussions if an agreement isn’t reached.
‘We believe the odds are high that a fair trade deal will eventually be worked out--but if not, there could be serious repercussions,’ said Dimon.
Did corporate tax cuts help JPMorgan Chase's Q1 profits?
Dimon also wrote to shareholders about how the corporate tax cuts passed by the US Congress in 2018 temporarily helped JPMorgan Chase’s profits in late 2018. Dimon told stockholders that the tax cuts added $3.7 billion to the corporation’s bottom line.
‘For the long term, we expect that some or eventually most of that increase will be erased as companies compete for customers on products, capabilities and prices. However, we did take this opportunity in the short term to massively increase our investments,’ wrote Dimon.
It remains to be seen if JPMorgan Chase’s Q1 revenue will be affected by the waning influence of the 2018 corporate tax cuts in 2019.
Will the Fed affect JPMorgan Chase's Q1 revenue?
Chuck Carlson, chief executive officer at Horizon Investment Services, said that the US Federal Reserve’s decision to pause interest rates for the rest of the year could greatly impact JPMorgan Chase’s Q1 earnings. The Fed’s decision could lead to flat or lowered interest rates for banks and impact JPMorgan Chase’s Q1 revenue.
‘The Fed pivoted so abruptly, which gives one pause about what they’re saying about the economy. Flat to falling interest rates are not good news for bank interest margins. It’s not surprising that analysts are taking down [banks’] earnings estimates,’ said Carlson.
JPMorgan Chase’s Q1 earnings will depend on a number of factors when it reports its revenue later this week. Shareholders and investors will be watching to see if JPMorgan Chase’s Q1 profits will meet their expectations.
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