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The agencies responsible for implementing the restriction on proprietary trading have asked the public to respond to hundreds of questions over the next three months that will help shape the final version.
October 11 -
With M&A and the economy at a standstill, bank executives will have a hard time explaining how they can grow when they report third-quarter results.
October 5
JPMorgan Chase & Co.'s third-quarter results may offer a preview of the bank's future.
It has already disclosed the big disappointment in the third-quarter results it will report Thursday — a slowdown in trading that may have sent sales falling by an estimated $1.65 billion in its markets division.
That forecast has heightened scrutiny of the parts of the business that operate far from Wall Street, such as the simpler loans-and-deposits side of the $2.3 trillion-asset, 4,600-branch bank. So has the 298-page proposal issued by regulators Tuesday that would stop banks from trading for their own profit; market watchers worry it could hid JPMorgan Chase hard.
The third quarter could foreshadow how the country's second-biggest bank by assets can perform without relying on blowout gains from advising mergers, underwriting stock offerings and trading stocks and bonds.
"You've got your investment banking, your trading…. That is down in the dumps," said David Dietze, president and chief investment strategist for Point View Wealth Management Inc., an investment advisor in Summit, N.J.
Dietze is optimistic about how JPMorgan Chase did in credit cards, retail and commercial banking. In the second quarter, it reported higher fees from mortgages and cards while growing loans to midsize businesses. The bad economy may not have killed its momentum in those areas, he said.
"Your traditional banking business is starting to get some traction here. Deposits are up. Loans to business are up… in the mortgage business people are tripping over themselves to refinance," he said.
The big question is whether vanilla banking will be enough of a profit engine for a company where market gains helped drive earnings to record levels in the last year. JPMorgan Chase in the second quarter earned $5.4 billion, with about 38% of profits coming from an investment bank that had surged during the downturn thanks to hobbled rivals and its purchase of Bear Stearns.
The head of JPMorgan Chase's investment bank, Jes Staley, said at an investor conference in September that quarter-to-quarter markets revenue could fall by 30% in the third quarter, while advisory fees could be down by 50%. Barclays Capital analysts said in a research note this week that those declines could result in markets-related revenue declining to $3.85 billion, from $5.5 billion in the previous quarter.
Andrew Marquardt, managing director and head of research for large banks with Evercore Partners, said he is looking for insight into whether that lull will be temporary or permanent.
He will be paying close attention to "the body language" and "commentary-looking forward" as JPMorgan Chase Chairman and Chief Executive Jamie Dimon discusses earnings with analysts on Wednesday.
"I expect the message is going to be: 'Listen, it was a tough quarter in the third quarter. But, you know, it's not such a bad environment and as poor an outlook as the markets are implying,'" he said.
The consensus estimate of 30 analysts polled by Bloomberg has JPMorgan Chase earning about 92 cents per share, down from $1.27 per share in the prior quarter and $1.01 per share a year earlier.
