Bigger drop than previously expected
Wall Street’s pandemic-era trading boom could be drawing to a close, with JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon signalling a 38 per cent decline in trading revenue from a year ago — a bigger drop than previously expected.
Trading revenue at the largest U.S. bank will drop to just north of US$6 billion in the second quarter, Dimon said Monday at a Morgan Stanley virtual conference. That tally could end up lower than the already reduced average analyst estimate of US$6.5 billion, according to data compiled by Bloomberg.
The drop comes after a year of pandemic-induced market volatility proved lucrative for the biggest Wall Street operations. JPMorgan shares dropped as much as 2 per cent after Dimon’s comments, continuing a slide after the stock hit an all-time high earlier this month, with other bank stocks declining as well.
This quarter will be “more normal” for fixed-income and equities trading, meaning “something a little bit north of US$6 billion, which is still pretty good, by the way,” he said. Investment-banking revenue, meanwhile, will be driven up by an active mergers-and-acquisitions market, resulting in what “could be one of the best quarters you’ve ever seen” for that business.
Dimon also pared back JPMorgan’s forecast for net interest income, predicting US$52.5 billion this year, down from a previous estimate of US$55 billion for 2021.
“I know it’s a little disappointing,” Dimon said.