JPMorgan Chase & Co. Chief Financial Officer Jeremy Burnham said during the company's first-quarter earnings call on Friday that while the bank's investment banking business is seeing good momentum, he remains cautious about the future. Stated.
JP Morgan Chase Although the investment banking sector is starting to emerge from the downturn that hit the industry as a whole last year, it continues to wait for a largely stagnant mergers and acquisitions market.
The $4.1 trillion-asset bank posted a 27% year-over-year increase in investment banking to $2 billion in the first quarter, leveraging fees from equity and bond market activity to offset the impact of milquetoast trading. I earned business income.
“We're pleased with the very strong results in our investment banking division this quarter,” Chief Financial Officer Jeremy Burnham said on a call with reporters on Friday.
at the same time, JP Morgan He expressed caution about the outlook for investment banking due to regulatory headwinds on merger activity and economic factors that could put pressure on the market.
Mark Naron, a senior director at Fitch Ratings, said in an interview that investment banking is helping the banking industry's profits and that capital market activity could help banks' fee income exceed expectations this year. Ta.
like JP Morgan, wells fargo on Friday reported encouraging quarterly results for its investment banking business, adding momentum to CEO Charlie Scharf's long-standing turnaround story. Very recently, Wells hired Doug Brownstein. Those who previously worked with Schaaf JP MorganStrengthen the corporate and investment banking sector.
wells fargo Chief Financial Officer Mike Santomassimo said during the bank's earnings call on Friday that activity across all investment banking businesses increased in the first quarter, with revenue of $474 million, up 24% from the previous quarter. He said he raised it. Investment banking performance helped boost the company's overall banking revenue, given the decline in lending and treasury management.
“Our results benefited from our historical strengths, such as investment grade debt capital markets, and the talent we have brought into the business,” Santomassimo said. “It's still early, but I'm encouraged by the visible green shoots.”
Brian Mulberry, a director at Zacks Investment Management, said Wells needs to figure out its value proposition in investment banking as it competes with giants such as: JP Morgan And Goldman Sachs. He further pointed out that weak demand for IPOs and transactions is fostering a competitive environment, and that the downturn could be an opportunity for market participants to forge new relationships.
Fee income from investment banking can help wells fargo Mulberry said this is to offset the higher interest rates they are paying depositors. If interest rates remain high for an extended period of time, Wells will need more sources of income, he added.
in JP Morgan, the investment banking division's performance last quarter showed progress in the sector's recovery from the slump. About a year and a half ago, the nation's largest bank by assets said: Currently considering layoffs and salary reductions In investment banking business.
At the beginning of this year, JP Morgan Began restructuring the investment banking organization. The bank said it plans to combine financial reporting for its commercial banking and corporate and investment banking divisions, rather than disclosing them separately, starting in the second quarter.
Burnham collapsed on Friday. JP Morgan's Investment banking performance across a variety of products. He said views around initial public offerings (IPOs) had “changed meaningfully this quarter” and banks were starting to expect more encouraging results after some disappointing results. .
A recent report from accounting giant EY found that the number of global IPOs fell 7% year-on-year in the first quarter, but revenue rose 7%.
Mr Burnham said the positive dialogue and improved evaluation environment gave him more optimism.
still, JP Morgan The executives added some caveats about investment banking. Burnham said that while equity capital market conditions were strong in the first quarter, the bank is mindful that some of the acceleration may be unsustainable.
He added that the risks are “even more severe” in debt capital markets. A high proportion of the total debt refinancing required this year occurred in the first quarter.
Although interest rates remain high, investors' relative optimism about the economy means they are not charging corporate borrowers as much as they could in a riskier environment. Credit spreads have narrowed this year, narrowing the difference between interest rates on U.S. Treasuries and corporate debt.
“Credit spreads are actually quite tight right now,” Fitch's Naron said. “I think CFOs are saying, “Oh, it's a good time to issue.'' And they're probably losing the waiting game in terms of waiting for interest rates to come down and finding a cheaper rate environment. I guess you realize that.”
According to JP Morgan's Burnham talks about mergers and acquisitions. He said he has heard there is pent-up demand to resume trading, but believes regulatory headwinds are “chilling” activity. But over time, he expects the need to buy and sell will be replaced by a regulatory environment.
“We are unabashed in saying that we are currently under-revenued in investment banking,” Burnham said on a conference call. “That’s why we’re huddled together. We’re engaged with our customers. We’re fighting to make sure we have the right resources in our wallets at a more robust level and to take every share. I am confirming that there is.”
