JPMorgan’s investment bank surged in the first quarter, kicking off an earnings season where dealmakers are expected to bolster overall profits at Wall Street’s biggest lenders.
The US banking giant posted revenues of $33.1bn, up by 14% on the previous year and ahead of analysts expectations as investment bank fees surged. Net profits of $14.3bn were up by nearly 400% on the same period last year, when the Covid-19 pandemic started sweeping across the world.
A $4.2bn net gain related to money put aside to cover potential pandemic induced loan losses helped to bolster profits. JPMorgan took an $8.3bn hit to cover these costs during the same period last year.
JPMorgan’s corporate and investment bank was the key driver of revenues, offsetting reduced performance in other units, with the surge in so-called blank cheque companies and initial public offerings pushing its dealmaking unit to a 57% increase on the previous year, while the trading bonanza that helped support overall profits at Wall Street banks last year continued.
The Wall Street bank posted profits of $5.7bn within its corporate and investment bank, which was up by 189% on the previous year. Trading revenues of $9.1bn were up by 25% on the first quarter of last year, when Covid-19 induced volatility prompted huge volatility in markets, kick-starting banks’ trading surge. Fixed income was up by 15% to $5.8bn, while equities revenues increased by 47% to $3.3bn.
Investment banks hauled in fees of $32.9bn during the first quarter — an all-time high, according to data provider Dealogic — as equity capital markets revenues more than doubled, helped by a surge in special purpose acquisition company IPOs. Spacs raise money on public markets with the aim of acquiring a private company and have ballooned to 302 deals worth $96.1bn so far in 2021, according to Dealogic, eclipsing any previous annual records.
At JPMorgan, ECM fees nearly tripled to $1.1bn, while M&A fees increased by 35% to $680m.
“With CEO confidence high, a strengthening economy and a busy IPO calendar, we expect momentum to continue,” said Daniel Pinto, chief executive of corporate and investment banking at JPMorgan.
“We continue to make significant investments in products, people, and technology, all while maintaining credit discipline and a fortress balance sheet,” said chairman and chief executive, Jamie Dimon, in a statement.
Dimon already struck a bullish tone on the outlook for the US economy in the aftermath of the Covid-19 pandemic, saying in his annual shareholder letter on 7 April that it was heading for a “Goldilocks moment” with fast growth, gently rising inflation and rising interest rates.
To contact the author of this story with feedback or news, email Paul Clarke