JPMorgan Chase’s trading and investment banking revenues “are up about 20 per cent” so far in the fourth quarter, chief executive Jamie Dimon said on Tuesday, signalling a strong end to a year when volatility and central bank interventions paid off big for Wall Street.
Mr Dimon, who runs the world’s biggest investment bank by revenue, was the first of his peers to give detailed guidance on performance for the final three months of 2020.
“You didn’t ask me, so I’ll tell you anyway, trading and investment bank numbers are up about 20 per cent, maybe a little more (in the fourth quarter),” he said at the end of a 40-minute question-and-answer session for Goldman Sachs’ virtual financial conference.
That suggests only a minor slowdown from the third quarter, when JPMorgan’s combined trading and investment banking revenues jumped almost 25 per cent from a year earlier. In the second quarter combined trading and investment banking revenues were up 66 per cent versus the same period in 2019, as Wall Street banks enjoyed a bonanza quarter.
“It’s reflective of the extraordinary environment,” Mr Dimon said of the performance for the first nine months of the year, a period when the Federal Reserve launched unprecedented asset purchase programmes that spurred market activity. “I do think we hit the bottom, and we’re growing,” he said of the longer-term trends for trading revenues.
Jason Goldberg, banks analyst at Barclays, said the JPMorgan guidance was “not surprising given the current backdrop but better than expectations at the start of the quarter”.
Last week the chief financial officers of Citigroup and Morgan Stanley told the Financial Times banking summit that they had seen strong trends in the final quarter of the year at their investment banks.
Mr Dimon also offered reassurance on the outlook for loan losses at JPMorgan, stressing that the bank was over reserved for the “base case”, or most likely economic outcome, because of loan loss charges it booked earlier this year. “There’s no question that things are better than people thought a few months ago,” he said.
Still, the banker, who is known as one of Wall Street’s more conservative CEOs, hinted at a cautious approach to releasing some of those reserves and boosting profits as the US heads into a “cold winter”.
“People want to be comfortable, and most banks don’t want to be in a position with a swing of reserves up and down every quarter . . . in a way you can’t understand,” he said.
Mr Dimon said JPMorgan’s expenses for the full year would likely be about $1bn higher than analysts expected, at $67bn, as the bank invests more for growth.
Bank of America chief executive Brian Moynihan and Citigroup finance boss Mark Mason are due to speak at the same conference on Wednesday.