JPMorgan sees investment banking boom slowing profits

According to chief executive Jamie Dimon, JPMorgan Chase could have one of its best quarters for transaction fees, helping to offset sluggish loan growth and slowing trading income for the bank.

“Investment banking, this could be one of the best quarters we’ve ever seen,” Dimon said Monday at a virtual conference hosted by Morgan Stanley.

“I would just use a number as a 20% increase over the previous year [and] previous quarter. It could be 15 to 20 percent. The reason is that there are big deals that may or may not be done. ”

Since the middle of last year, Wall Street banks have benefited from a surge in mergers and acquisitions. This is explained by the rise of specialist acquisition firms, a mass of private capital seeking deals and large companies taking over liquidity, as well as a robust market for debt and debt fundraising. actions.

JPMorgan currently tops the rankings for investment banking fees collected around the world, according to Refinitiv, with just over $ 5.5 billion to date, up from $ 3.98 billion a year earlier. The bank also increased its share of fees to 8.3 percent from 7.5 percent.

Dimon warned that the recent boom in fixed income and equity trading has slowed this quarter.

“The quarter of last year was exceptional. The last quarter was exceptional. This trimester is what I would call more normal ”, Dimon mentionned.

He predicted that the bank would see trading income in the next quarter of “a little north of $ 6 billion, which is still pretty good.”

One of the concerns for banking investors and analysts is weak loan growth, which banks attribute to the liquidity-flooded market and consumers who are holding onto liquidity from the U.S. government and U.S. government stimulus programs. Federal Reserve.

Dimon said the bank was starting to see “just a little bit” of loan growth. He said it would eventually take over from a strong US economy.

Dimon also used his appearance at the conference to lower JPMorgan’s forecast for 2021 net interest income, which is income from interest-bearing assets net of financing costs, to $ 52.5 billion from around $ 55. billion dollars previously, which he admitted to be “a little disappointing”. .

JPMorgan reports second quarter results on July 13. profits quintupled in the first quarter.

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