JPMorgan Chase may be poised for one of its strongest chapters for deal-making fees, according to CEO Jamie Dimon, helping to offset anemic loan growth and a slowdown in the bank’s trading income.
“Investment banking, may be one of the best chapters we’ve ever seen,” Dimon said Monday at a virtual conference hosted by Morgan Stanley.
“I will use a number like a 20 percent increase from the previous year [and] previous quarter. It can be 15-20 per cent. The reason for this is that there are big deals that may or may not be closed.”
Since the middle of last year, Wall Street banks have benefited from increased M&A activity. This has been driven by the emergence of special purpose buyouts, an abundance of private capital looking for deals, a large number of buyers from cash-flow companies, as well as a strong market for raising funds from debt and equity.
According to Refinitiv, JPMorgan currently ranks first in the investment banking fee table earned globally, with just over $5.5 billion annually so far, up from $3.98 billion the previous year. The bank also increased its share of fees to 8.3 percent from 7.5 percent.
Dimon warned that the recent boom in trading in fixed-income securities and stocks slowed this quarter.
“The quarter of last year was exceptional. The last quarter was exceptional. This quarter is what I would call more normal,” Damon He said.
He predicted that the bank would see revenue from trading in the next quarter from “a little north of $6 billion, which is still good.”
One area of concern for bank investors and analysts has been the lackluster growth in lending, which is the lackluster growth in lending, which has been caused by banks flooding the market with liquidity and consumers holding cash from stimulus programs by the US government and Federal Reserve.
Dimon said the bank is starting to see “just a little bit of money” from loan growth. He said it would eventually pick up on the brunt of the strong US economy.
Dimon also used his appearance at the conference to lower JPMorgan’s forecast for 2021 net interest income, which is revenue earned from interest-bearing assets net of financing costs, to $52.5 billion from about $55 billion previously, which he admitted was “a bit disappointing.”
JPMorgan announces second-quarter earnings on July 13 Profits grew fivefold in the first quarter.