Trouble is brewing in the investment banking industry as clients remain wary of the current economic environment. An aggressive Fed and the potential for a recession are weighing on corporate negotiations, while soaring inflation continues to cloud the outlook. IPOs have also held back this year as the market recorded worst first half to one year since 1970.
Storm clouds: JPMorgan’s (JPM) revenue from debt and equity underwriting and transaction advisory could fall 45% to 50% in the third quarter from a year earlier, according to the chairman and chief executive officer. Daniel Pinto operation. This compares to the $3.3 billion in revenue the division made in the third quarter of 2021, but was ultimately followed by a 44% drop in the first six months of 2022. The estimates are notable as the banks are heading into the next earnings season next month, with JPMorgan (JPM) announcing its quarterly results on October 14.
Some fear the forecast could trigger a series of layoffs, similar to those recently reported at Goldman Sachs (GS), but Pinto said the bank would adopt a measured response. “You have to be very careful when you have a bit of a downturn to start cutting bankers here and there because you’re hurting the possibility of growth going forward,” he told the Barclays Global Financial Services Conference. At New York. “The banking industry has a large portion of variable compensation, so you can adjust not just by letting people go, but by reducing compensation.”
Not all dark and gloomy: JPMorgan (JPM) sees market revenue (the money it makes from trading) rise 5% in the third quarter – from a record $6.3 billion hit a year ago – as the strength in bond activity offset any weakness in equities.
Related investment banks: Barclays (BCS), BofA Securities (BAC), Citigroup (C), Credit Suisse (CS), Deutsche Bank (DB), HSBC (HSBC), Jefferies Group (JEF), Lazard (LAZ), Nomura (NOM), Morgan Stanley (MS), UBS (UBS), Wells Fargo Securities (WFC).