JP Morgan Chase’s investment banking revenues could drop by as much as 50 per cent in the third quarter of 2022, one the Wall Street bank’s most senior executives has warned.
The bank’s president and chief operating officer Daniel Pinto said he expects JP Morgan’s investment banking fees to be 45-50 per cent lower than the $3.3bn it achieved in Q3 last year, according to the Financial Times.
The forecast comes as the bank’s fees have already fallen 44 per cent over the first six months of 2022, following a blockbuster year for dealmaking in 2021.
The slump raises the prospect of layoffs in America’s largest bank by assets, as Wall Street grapples with the potential for a major economic downturn.
Goldman Sachs yesterday confirmed it will restart cutting jobs this month, following the bank’s decision to pause its annual cull for the past two years.
When asked whether JP Morgan would follow suit, Pinto said at the Barclays Global Financial Services Conference in New York that the bank would “adjust over time to whatever we believe is a medium-term structure needed”.
He noted the bank could “adjust” compensation, instead of letting people go, as he suggested “you need to be careful when you have a bit of a downturn… because you will hurt the possibility for growth going forwards.”
Pinto noted JP Morgan’s trading business has profited on the back of market volatility, to see its revenues increase five per cent year on year.
JP Morgan is set to publish its third quarter results on 14 October.