Tuesday morning greeted us with earnings from banking behemoth JPMorgan Chase (NYSE: JPM). The company said it earned $3.59 billion and that it nearly doubled the amount of money it saved for loan losses in the third quarter. Breaking the results down into per-share earnings, JPM trounced the consensus estimate. The bank earned 82 cents per share, nearly double the expected 49 cents per share. Quarterly revenue increased to $26.62 billion from last year's same-quarter revenue of $14.74 billion.
The bank did temper the earnings news by stating that loan losses are still high, and that it expects the situation to remain the same for the foreseeable future. This news isn't great, as it hints at further weakness in the economy -- let's see how the Street welcomes this news.
With the stock battling overhead resistance at the $47 level, it will certainly be interesting to see if the good news outweighs the negative news as to the loans. I'm guessing it will.
What does this mean for the other banks reporting earnings this week (Citigroup (NYSE: C) and Bank of America (NYSE: BAC))? It could set the bar extremely high for the remaining banks if investors look at JPM's results and automatically assume the rest of the banking sector should follow suit. I could be setting them up for disappointment.
Yes, it certainly seems the economic recovery is well under way, but what if some financial firms disappoint? Will it be assumed that these banks are set up for a run lower? We shall soon find out.
I am glad that JPM turned in a good quarter. I think it will be good (in the long run) for the psyche of the battered investor. Let's just see if the rest of the financial sector follow suit.
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