JPMorgan’s market and investor services
Market and investor services are part of JPMorgan Chase’s (JPM) Corporate & Investment Bank segment. Market and investor services include revenue from proprietary trading and allied securities’ services. Overall, market and investor services’ revenue performed well in the fourth quarter. However, there was a wide difference in how different products performed.
Equity markets performed well
In market and investor services, the best performing product was equity markets. Equity markets’ revenue was $1.1 billion. This was a handsome rise of 25% year-over-year, or YoY. This was primarily driven by higher revenue on derivatives.
In contrast, fixed-income markets’ revenue fell by 38%—compared to the same period in 2013. This was due to the sale of physical commodities. It was also due to the special opportunities group business. Excluding the sale, the fall would have been limited. It would have been a drop of 14%.
Security services’ revenue wast $1.1 billion. This was an increase of 6% YoY. This increase was driven by higher fees and commissions.
Expenses for market and investor services rose
On the expenses side, things weren’t good for market and investor services. Expenses rose by 14% YoY—driven primarily by legal costs.
Overall, the Commercial & Investment Banking segment reported a profit of $972 million. This was an increase of 3%—compared to the same quarter last year. This segment has low returns. It had a return on equity of only 5% on $61 billion of average capital.
JPMorgan is strong in this line of business—locally and globally. It’s the largest bank in global investment banking fee. It’s the second largest bank in mergers and acquisitions. JPMorgan is a much bigger player in this business segment—compared to Citibank (C), Bank of America (BAC), and Wells Fargo (WFC). It’s also much larger than many smaller banks in the Financial Select Sector SPDR (XLF).