JP Morgan dealmaking posts surprise Q2 gains
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The news: JP Morgan’s investment banking division posted a surprise gain in the second-quarter, a signal that the sector could be heading toward a rebound.
The numbers: The largest US bank said that its investment banking fees climbed 7%, a stark contrast from the 14% decline that had been predicted by analysts.
Within the investment banking division, debt underwriting climbed 12% while fees from advising on mergers and acquisitions climbed 8%. Equity-underwriting revenue fell 6%, while Bloomberg analysts had expected a 29% drop.
JP Morgan’s trading business also posted strong results for the quarter, with its fixed income business adding USD5.69 billion, while equity trading came in at USD3.25 billion. Equity trading topped its first quarter performance to set the new all-time high.
While JP Morgan’s net interest income (NII) for the quarter came in below estimates, the bank now expects about USD95.5 billion of NII compared with an earlier estimate of nearly USD94.5 billion.
Shares of JP Morgan, which were up 20% this year through Monday, dropped 0.4% in early trading in New York on Tuesday.
The context: JP Morgan’s investment banking results reflect the impact of Trump’s trade tariffs, slowing at the outset of the quarter before bouncing back on renewed market optimism.
The bank said that US borrowers are managing better than expected, with provisions to cover potential bad loans of around USD2.8 billion in the second quarter, below the USD3.2 billion analysts polled by Bloomberg had forecast.
What they said: CEO Jamie Dimon said that the economy remained “resilient” in the June quarter, and said that potential deregulation under President Trump would be “positive for the economic outlook.”
However, Dimon added that significant risks persist “including from tariffs and trade uncertainty, worsening geopolitical conditions, high fiscal deficits and elevated asset prices.”
On the dealmaking boost, Dimon said: “activity started slow but gained momentum as market sentiment improved…The finalization of tax reform and potential deregulation are positive for the economic outlook, however, significant risks persist – including from tariffs and trade uncertainty, worsening geopolitical conditions, high fiscal deficits and elevated asset prices.”
The sources: JP Morgan earnings, Bloomberg, Reuters
