JPMorgan Chase share price and Q3 earnings results preview

​​​When are JPMorgan ’s results expected?

JPMorgan Chase & Co is set to release its third quarter (Q3) 2023 results on Friday, 13 October at 21:45 pm AEDT. The results are for the quarter ending September 2023.

​What is ‘The Street’s’ expectation for the FY results?

​‘The Street’ expectations for the upcoming results are as follows:

• ​Revenue of $39,336 billion: +25.48% year-on-year (YoY)
• ​Earnings per Share (EPS): $3.87 +15.18% (YoY)

Reducing risk: JPMorgan's strategy to lighten its loan load

​JPMorgan Chase is ramping up its securitisation efforts in anticipation of proposed new US capital requirements for large banks. The bank plans to securitise and sell a higher portion of its loan portfolio, specifically focusing on products at Chase, its retail business, such as mortgages, auto lending, and credit card loans.

This move would allow JPMorgan to remove these loans from its balance sheet, thereby avoiding the need to hold regulatory capital against them. However, the bank would still continue to service the loans to maintain its client relationships.

​JPMorgan, as the largest US bank by assets, had $1.3tn in loans at the end of June. By securitising more of its loans, the bank aims to reduce its risk-weighted assets and comply with the potential new capital requirements.

​It is worth noting that JPMorgan's securitisation plans come at a time when the broader securitisation market is experiencing more subdued activity. US asset-backed and mortgage-backed securitisation issuance in 2023 has been the lowest since 2016.

Dimon's discontent: CEO's concerns over Fed proposals

​JPMorgan CEO Jamie Dimon has criticised the Federal Reserve's (Fed) proposals, expressing concerns that they could render bank stocks uninvestable. There are also concerns among Wall Street bankers that the new capital rules could disincentivise them from making loans and drive more banking activity into the less regulated shadow banking sector.

This trend has been ongoing for over a decade with the expansion of hedge funds and private credit firms. Banks argue that this shift in lending activity could lead to higher borrowing costs, as banks benefit from cheaper deposit funding compared to these funds and firms. Regulators, on the other hand, argue that higher capital standards are necessary to enhance the safety of banks and prevent failures.

Changing of the guard: Ben Challice steps down as head of trading services

​In other news, Ben Challice is stepping down as the global head of trading services at JPMorgan, while the head of the bank's blockchain division, Tyrone Lobban, highlighted that the majority of his conversations with clients revolve around tokenised forms of traditional financial instruments rather than cryptocurrencies.

Lobban noted that there is a significant focus on bringing traditional assets onto blockchain platforms, with many global banks, broker-dealers, and asset managers exploring permissioned or public blockchains for various purposes.

AI in banking: JPMorgan's path to future success

​JPMorgan’s CEO recently stated that Artificial Intelligence (AI) is already an integral part of the firm. Q3 earnings may show what impact AI might have on the investment bank’s results as the US labour market remains tight and the economy relatively healthy, with trading volumes, investment banking fees, net interest margins and income from mortgage banking all expected to contribute.

Refinitiv and IG client sentiment expectations

​Refinitiv data shows a consensus analyst rating of ‘buy’ for JPMorgan with 6 strong buy, 12 buy and 9 hold - with the mean of estimates suggesting a long-term price target of $169.14 for the share, roughly 18% higher than the current price (as of 5 October 2023).

Refinitiv chart

​IG sentiment data shows that 78% of clients with open positions on the share (as of 5 October 2023) expect the price to rise over the near term, while 22% of clients expect the price to fall whereas trading activity over this week and month shows 63% of buys.

IG client sentiment chart

​JPMorgan technical anaylsis

​JPMorgan’s share price, up around 6% year-to-date, is weighing on major support made up of the January-to-March highs, the May and mid-June highs as well as the 200-day simple moving average (SMA) at $141.06. This acted as support during the banking crisis in March and may do so again this time round.

​For the JPMorgan share price to re-integrate this year’s uptrend it will need to rise above its September peak at $150.25 on a daily chart closing basis. En route minor resistance can be spotted at the $145.46 August low and the $147.48 early July high.

​The July-to-October downtrend line at $148.20 could also act as resistance, together with last week’s $148.87 high.

​JPMorgan daily candlestick chart

​While the JPMorgan share price remains below its $150.25 September high, the medium-term downtrend will remain intact.

​A fall and daily chart close below the 200-day (SMA) at $141.06 could lead to the 200-week (SMA) at $132.57 being hit. Failure there could provoke a sell-off to the April $131.81 to $129.04 price gap.

​JPMorgan weekly candlestick chart