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Where JPMorgan’s Investment Banking Revenues Stand next to Competitors

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Investment banking grows on transactions

JPMorgan Chase (JPM) has continued to top charts in high investment banking fees in recent quarters due to its cross-border advisory for fundraising, mergers, joint ventures, and structured transactions. The bank is expected to see subdued or no sequential growth in 3Q17, though it should see double-digit growth on a YoY (year-over-year) basis.

Corporates across sectors are still upbeat about their growth plans, and it appears that President Trump’s proposed push for manufacturing is leading to more transaction opportunities for investment bankers.

In 2Q17, JPM managed net revenues of $8.89 billion from its investment banking division, compared with $9.17 billion in 2Q16 and $9.54 billion in 1Q17. This growth was helped by a 17% rise in banking revenues to $3.12 billion, led by investment banking and treasury revenues.

JPM ranks first in global investment banking fees, next to peers Goldman Sachs (GS), Bank of America (BAC), and Morgan Stanley (MS). Notably, JPM’s investment banking division’s treasury revenues grew mainly due to higher rates and operating deposits.

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Underwriting revenues

JPM’s investment banking revenues have risen on equity, debt underwriting, and advisory on strategic transactions. Commercial and investment banks (XLF) had hinted at lower trading revenues in 3Q17, but market and investor services revenues fell 11% in 2Q17 YoY as well as sequentially.

This decline was mainly due to 19% lower revenues from fixed income markets, which reached only $3.2 billion. These lower revenues were mainly offset by an 8% rise, however, in securities market revenues, which reached $982 million. The division managed a 15% return on equity, reflecting high operating margins.

Notably, JPM’s investment banking division’s expenses fell 5% on a YoY basis to $4.8 billion due to lower employee compensation. The lower expenses and credit costs benefits of $53 million helped the bank with a 9% increase in its net income, which came in at $2.7 billion.

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