Fixed income revenues declined 10%
JPMorgan’s (JPM) revenues from fixed income markets declined 10% year-over-year in the second quarter of 2015. The drop excludes the impacts of one-off items. The decline in fixed income was contributed by weakness in credit and other securitized products. The decline also came from lower currencies and emerging markets revenues, resulting from the events in Greece and the Eurozone.
Equity markets revenues rose 27% year-over-year, and revenues from Asia outperformed compared with the previous year. JPMorgan witnessed high client interest in China and Hong Kong during the market rally and later to hedge when the market plunged.
JPM’s market revenues were up 7% year-over-year in the previous quarter. Generally, trading revenues tend to be very unstable. It’s important for banks to be on the right side of the trade to benefit from trading on macro factors. JPM’s peer Wells Fargo (WFC) has much smaller operations in the investment banking segment. The banking sector makes up 37% of the Financial Select Sector SPDR ETF (XLF).
Corporate and Investment Bank segment
Net revenues for JPMorgan’s Corporate and Investment Bank segment declined 6% year-over-year. The decline was driven by lower lending revenues due to losses on securities received from restructurings. Treasury services revenues also declined due to lower net interest income. The declines were partially offset by gains in investment banking.
The segment’s net income was, however, up 10% due to business simplification and lower legal and compensation expenses. Read more about JPMorgan’s business simplification efforts in J.P. Morgan Exits Non-Core Businesses in Bid to Simplify. The above graph shows the growth in the segment’s revenues and net income over the past five quarters.