3 Things to Watch For in JPMorgan Chase's Earnings

JPMorgan Chase (NYS: JPM) , along with Wells Fargo (NYS: WFC) , kicks off bank earnings season this Friday, before the market opens.

This report is interesting for bank investors, because these are the two big, diversified banks that the market believes in most. Their performance will give us hints into the earnings of Bank of America (NYS: BAC) and Citigroup (NYS: C) , which both report next week.

I'll be back soon with a preview of Wells' earnings, but here's what we should look at when JPMorgan reports.

Last year, JPMorgan racked up $1.28 in earnings for the first quarter, but this year analysts expect only $1.17. Beyond the bottom line, here are three things we should be looking at as investors or prospective investors.

So strong we're giving it away!
JPMorgan passed the recent stress tests and announced a dividend raise (from a quarter a quarter to $0.30) and a $12 billion stock-repurchase program for this year. This is good, because it means the Federal Reserve believes JPMorgan is strong enough to give back capital to shareholders. But we should also look to see whether capital is rising in advance of the implementation of stricter Basel III regulations, which ramp up in earnest from 2015 to 2019.

Wall Street ... money sleeps?
Investment banking and trading revenues were down significantly on lower volumes last quarter. If stock market volumes are any indication, we shouldn't expect much of a turnaround here. But either way, the Wall Street part of the business will always be volatile. Expect surprises and many special items to wade through.

Loan strength?
In JPMorgan's Main Street operations, we should look for the strength of lending operations, from mortgages to credit cards. Ideally, we'd see growth in loan volume, higher interest rate spreads, and fewer delinquencies and bad loans. In addition, we'll want to see how JPMorgan is dealing with non-interest sources of revenue in light of crimps on debit interchange fees and overdraft fees. I'm confident the big banks will figure out how to pass along these expenses, so we'll have to see exactly how.

Get ready for more earnings-season surprises
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At the time thisarticle was published Anand Chokkaveluowns shares of Bank of America, Citigroup, Wells Fargo, JPMorgan Chase, and Apple. He also owns long-dated options on Bank of America and warrants on Citigroup, Wells Fargo, and JPMorgan Chase. The Motley Fool owns shares of Apple and Wells Fargo and has created a covered strangle position in Wells Fargo.Motley Fool newsletter serviceshave recommended buying shares of Apple and Wells Fargo and creating a bull call spread position in Apple. The Motley Fool has adisclosure policy.We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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