The IB slump’s over. I guess.
JPMorgan’s dealmakers dialed up $2.46 billion in revenue during Q2, according to the firm’s results, released on Friday. That was easily more than the $2.13 billion consensus expected.
Advisory was the strongest since 2022 and equities fees the highest since 2021, before a Street-wide slump set in.
Big bank bosses spent several quarters last year suggesting IB was turning a corner. Maybe we’re finally out of the woods. Or out of those wood, at least.
As the figure shows, Q2 of 2024 was the best quarter for JPMorgan’s investment bankers in years.
IB fees rose by half from the same period a year ago. Jamie Dimon dryly noted that the optically huge gain was “against a low base.”
On a call with the media, CFO Jeremy Barnum said that for now, the bank wants to be “a little cautious” about the outlook for dealmaking. There’s a “robust” dialogue around M&A, but the regulatory environment’s onerous, he told reporters.
The bank’s equities traders also performed well. Revenue of $2.97 billion was up 20% YoY and easily beat the Street.
FICC was a little light. Revenue there was $4.82 billion, up 5% and slightly below the $4.85 billion estimate.
So, good news in IB and markets. Shareholders will certainly take it.
That said, NII was “just” in line at $22.86 billion (managed). That was up a billion from Q2 of last year, but down sequentially.
The bank still sees $91 billion in net interest income for the full-year.
The provision for credit losses, at more than $3 billion, was considerably higher than the $2.83 billion consensus expected. There was also another half billion ($546 million actually, but who’s counting?) in losses on MBS and Treasury sales — “discretionary securities losses,” as Dimon calls them. Those losses subtracted 14 cents from the bottom line.
Dimon recorded the biggest-ever profit for any bank, but the results were flattered by the sale of Visa shares, which accounted for $2.04 of the reported $6.12 in EPS. Excluding that sale and stripping out other “significant items” including the losses on Treasurys and MBS, net income was $13.1 billion and EPS was $4.40.
All in all, I think the cloudy outlook — higher expenses, the reserve build and a generalized sense that the macro environment’s tenuous even if, as Barnum suggested, the US economy’s on track for a soft landing — may cast a shadow over the results, if not necessarily a proper pall.
As is his wont, Dimon delivered a quasi-foreboding, short editorial. “While market valuations and credit spreads seem to reflect a rather benign economic outlook, we continue to be vigilant about potential tail risks,” he said, calling the geopolitical environment “potentially the most dangerous since World War II.”
“There has been some progress bringing inflation down, but there are still multiple inflationary forces in front of us,” he went on, citing “large deficits, infrastructure needs, restructuring of trade and remilitarization of the world.”
Don’t worry: I’m sure JPMorgan will be fine regardless.
