Think investment banking is dying? This US behemoth prompts a rethink

JP MORGAN’S impressive first-quarter certainly poses a challenge for anyone convinced that the traditional investment banking model is dead.

The bank delivered a 13 per cent return on equity while revealing that its core tier one capital ratio in Basel III?terms is already above the minimum, at 7.3 per cent.

The bank has at least five years to get to what is likely to be the 10 per cent minimum for systemically important financial institutions, which it should achieve easily if it keeps up the earnings growth delivered this quarter.

Revenues in fixed income and equity markets were down slightly, but the $333m growth in advisory fees more than made up for the drop. The investment bank overall delivered a 24 per cent return on equity over the quarter.

The bank is still being dragged down by its retail bank and ongoing mortgage and real estate exposure, but although slow, the trend is one of gradual improvement.

With a run of quarterly earnings reports to follow, the bank’s rivals might be wishing they had gotten their news out first: JP Morgan could be hard to beat.