Remember: Volatility’s a boon if your business (or one of your businesses) is facilitating trades.
“Clients were active,” Jamie Dimon said Wednesday, when JPMorgan unveiled a set of results that included a sizable FICC beat, which in turn drove a 21% gain for the bank’s markets division.
JPMorgan thanked a lively quarter in credit and currencies, as well as an uptick in emerging market-related trading for $5.01 billion of FICC revenue. That was easily ahead of the $4.37 billion consensus.
In equities, the bank’s traders didn’t fare as well, or at least not relative to expectations. Sales of $2.04 billion rose 22% YoY, but fell short of consensus, which was looking for $2.32 billion.
All in all, JPMorgan’s trading haul, more than $7 billion, was a record for any fourth quarter. Suffice to say gamblers were gamblin’ and bettors were betting in and around the US election.
IB was a decent beat. Revenue there was $2.6 billion, a touch above estimates. Notably, advisory fees topped $1 billion for the first time in three years.
Equity underwriting was a beat at $498 million (versus $446 million expected), but debt fees came up a little short, at just $921 million, well below the $1.03 billion expected and the first quarter under a billion in a year.
All in all, the IB inflection looks to be sustained. We’ll see how everyone else fares across the Street.
Meanwhile, NII was $23.47 billion, ahead of estimates (and the initial guide from last quarter). The guide is $94 billion (~$90 billion ex-Markets) for the full-year 2025, when balance sheet growth should “partially offset lower rates,” the bank said.
On the top line, adjusted revenue of $43.74 billion easily beat, as did EPS of $4.81. Average loans were $1.3 trillion (against $1.35 trillion seen) and deposits were $2.4 trillion ($2.44 trillion seen).
I don’t see a lot of utility in parsing and nitpicking these numbers. JPMorgan did well last quarter, and they’ll do well this year too, one imagines.
Dimon called the US consumer (or at least consumer spending) “healthy,” said the US economy’s “resilient,” described unemployment as “relatively low” and said businesses are “encouraged by expectations for a more pro-growth agenda and improved collaboration between government and business.”
He flagged a pair of “significant risks.” The first’s inflation which may “persist for some time” considering “ongoing and future spending requirements.” The second’s a prospective global armed conflict.
As usual, Dimon reiterated that “the Firm” (proper noun) is prepared for “a wide range of scenarios.”
Speaking of a fool’s errand, how can anyone accurately predict trading revenue? Unless they have an internal source of information …
Prediction = Guess
There will be quarterly data reported fairly soon and banks report funds flows quarterly as well. Some clues might start to show.
Those NII numbers always blow me away. “And here’s how much money we make just by having money. It’s just under a tenth of a trillion dollars a year. Thank you, drive through.”
Yeah, maybe I’m still missing something, but with interest rates at 5%, are we really taming inflation? I’m not terribly bright, but if I’m reading my FRED charts correctly, the US government is paying out over a trillion dollars of interest every quarter which is about $500B more per quarter than the interest paid during and prior to the pandemic. Isn’t that basically $2T of stimulus per year?
Anyone have any data on how much additional interest expense are corporate and individual borrowers paying as a result of higher rates? The only way I see out of this is either crashing the economy (certainly a possibility when Republicans are in charge) or raising taxes (never going to happen).
The economy will crash, regardless of which party is in charge. It it not reasonable to think anything else will deflate the massive bubble that’s been blown. Leveraged leverage. Makes the fractional reserves scheme seem tame. It will pop as sure as it was blown. And it will be sudden. And there will layoffs and closures. And housing will follow suit. And then one day there will be green shoots. Kind of like how a forest fire ravages the land. Who knows when though?