JPMorgan Q2 Earnings on the Deck: A Smart Buy or Risky Bet?

JPMorgan JPM is scheduled to kickstart second-quarter 2025 earnings on July 15. As the largest American bank, its earnings are closely watched for insights into the financial sector, often serving as a bellwether for the quarterly performance of other banks.

JPM’s first-quarter performance was solid, driven by solid investment banking (IB) and trading performance and impressive growth in credit card and wholesale loans. This time, we believe the company’s performance will likely be modest. The Zacks Consensus Estimate for revenues of $43.47 billion suggests a 3.4% year-over-year decline.

In the past seven days, the consensus estimate for earnings for the to-be-reported quarter has been revised marginally upward to $4.49. This indicates a 2.1% rise from the prior-year quarter as higher net interest income (NII) and solid markets revenues offer some support.

Estimate Revision Trend
 

JPMorgan has an impressive earnings surprise history. The company’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, with the average beat being 10.70%.

Earnings Surprise History
 

Factors to Influence JPMorgan’s Q2 Performance

NII: In the second quarter, the Federal Reserve kept interest rates unchanged at 4.25-4.5%. This is likely to have offered support to JPMorgan’s NII as the funding/deposit costs stabilized. Also, despite an uncertain macroeconomic backdrop because of Trump’s tariff plans, the overall lending scenario was impressive. Per the Fed’s latest data, the demand for commercial and industrial, real estate and consumer loans was solid in the first two months of the quarter.

The Zacks Consensus Estimate for NII (reported) of $23.4 billion suggests a 3% rise on a year-over-year basis. Our estimate for NII implies growth of 1% to $23 billion.

Investment Banking (IB) Fees: Global mergers and acquisitions (M&As) in the second quarter of 2025 were impressive than previously expected. Markets plunged in early April after Trump announced sweeping tariffs, rattling business confidence. But as trade demands eased and policy direction became clearer, deal-making activities resumed in the last month of the quarter. JPMorgan’s leadership in the space is also likely to have supported advisory fees to some extent. 

The IPO market in the second quarter saw a resurgence, with a significant increase in both the number of IPOs and the amount of capital raised. This was driven by several factors, including strategic tariff pauses and positive economic data, which resulted in a rebound in market sentiment. Further, global bond issuance volume was decent. Thus, growth in JPM’s underwriting fees (accounting for almost 60% of total IB fees) is expected to have been modest during the to-be-reported quarter.

At the Investors Day conference in May, Troy Rohrbaugh, co-CEO of the Commercial & Investment Bank (CIB) segment, noted that economic uncertainty is expected to hurt JPM’s IB business, as deal-making activities have largely stalled. Second-quarter IB fees are expected to be down in the mid-teens range on a year-over-year basis.

The consensus estimate for IB revenues (in the CIB segment) of $2.18 billion implies a decrease of 11.4% from the prior-year quarter. We expect the metric to be $2.08 billion. 

Markets Revenues: Client activity and market volatility were strong in the second quarter. The uncertainty over the impact of tariffs on the U.S. economy and the Fed’s monetary policy drove client activity as investors shifted to safe havens. Volatility was high in equity markets and other asset classes, including commodities, bonds and foreign exchange. So, JPMorgan is likely to have recorded decent growth in markets revenues (comprising nearly 20% of the company’s total revenues) this time.

Management expects markets revenues in the second quarter to be up in the mid-to-high single-digits range on a year-over-year basis.

The Zacks Consensus Estimate for equity markets revenues is pegged at $3.15 billion, suggesting a rise of 6% from the prior-year quarter. The consensus estimate for fixed-income markets revenues of $5.25 billion indicates growth of 8.8%. We project equity markets revenues and fixed-income markets revenues of $3.26 billion and $5.21 billion, respectively.

Mortgage Banking Fees: Despite interest rate cuts by the central bank in 2024, mortgage rates did not come down significantly. The second quarter saw rates fluctuate, but they remained in the mid-to-upper 6% range. Hence, refinancing activities and origination volume were decent. Thus, mortgage banking fees are likely to have witnessed some improvement at JPMorgan, but a record number in the prior-year quarter is expected to be a challenge.

The consensus estimate for mortgage fees and related income of $281.4 million implies a 19.1% decrease from the prior-year quarter. Our estimate for the metric is pegged at $288.1 million.

Expenses: JPMorgan’s plan of entering new markets by opening branches, which is already on track, along with inorganic expansion efforts, is likely to have resulted in an increase in operating expenses in the second quarter. Also, investments in technology to strengthen digital offerings might have led to higher costs.

Our estimate for non-interest expenses is $23.7 billion, relatively stable year over year.

Asset Quality: JPMorgan is likely to have set aside a substantial amount of money for potential delinquent loans (mainly commercial loan defaults), given the expectations of higher for longer interest rates and the impact of Trump’s tariffs on inflation. Our estimate for provision for credit losses is pegged at $3.08 billion.

The Zacks Consensus Estimate for non-performing loans (NPLs) of $9.14 billion implies a 17.3% increase year over year. The consensus estimate for non-performing assets (NPAs) of $9.73 billion suggests a 15.6% rise. Our estimates for NPAs and NPLs are pegged at $9.15 billion and $8.52 billion, respectively.

What Our Model Unveils for JPMorgan

Per our proven model, the chances of JPMorgan beating estimates this time are high. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is the case here, as you can see below.

JPMorgan has an Earnings ESP of +0.42%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

JPM carries a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

JPM’s Price Performance & Premium Valuation

JPMorgan shares delivered a solid performance in the second quarter, outperforming the S&P 500 Index. However, the stock lagged behind key peers like Citigroup C and Bank of America BAC.

2Q25 JPM Price Performance
 

Citigroup is slated to announce second-quarter numbers on July 15, while Bank of America will release results on July 16. Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

JPM shares appear inexpensive relative to the industry. The stock is, at present, trading at the forward 12-month price/earnings (P/E) of 14.78X. This is below the industry’s 14.9X.

Price-to-Earnings F12M
 

Meanwhile, JPM stock is trading at a premium compared with Citigroup and Bank of America. At present, Citigroup has a forward P/E of 10.21X, while Bank of America’s forward P/E is 11.83X.

How to Approach JPMorgan Stock Before Q2 Earnings?

JPMorgan is well-placed to benefit from its scale and size, and leverage its leading position in several businesses. The acquisition of First Republic Bank in 2023 continues to support its financials. The company is expanding its footprint in new regions and plans to capitalize on cross-selling opportunities. While such expansion plans will lead to higher investment-related expenses, they bode well for the company’s long-term prospects and will provide it with an edge over its peers.

Yet, the volatile nature of the capital markets business will likely keep JPM’s fee income growth challenging. Also, weak asset quality is a headwind. 

So, investors must check management comments regarding this year’s NII and the IB business prospects during the second-quarter 2025 conference call before making any investment decision. Also, they should keep an eye on macroeconomic factors and policy matters that are likely to influence the company’s future performance. 

Those who already own JPM stock can hold on to it because it is less likely to disappoint over the long term. However, those who intend to buy the stock should consider the above-mentioned factors carefully and evaluate their risk tolerance before investing.

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This article originally published on Zacks Investment Research (zacks.com).

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