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Will JPM, C and Others Follow JEF and Post Solid Q3 IB Income?
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After more than two years of drought, investment banking (IB) seems to have recovered.
Investors got the first official glimpse at how the IB business has been playing out across the industry on Wednesday, Sept. 25, when Jefferies (JEF - Free Report) announced its quarterly results. This global investment bank posted IB revenues of $949 million for the third quarter of fiscal 2024, which surged 47% year over year. This was driven by robust advisory and underwriting businesses.
Now, we are waiting for results from other major Wall Street giants like JPMorgan (JPM - Free Report) , Citigroup (C - Free Report) , Bank of America (BAC - Free Report) and Goldman Sachs (GS - Free Report) . JPM and C will kick start earnings season on Oct. 11., with BAC and GS reporting on Oct. 15.
In the first half of 2024, these banks reaped robust returns from a resurgence in the IB business. Yet, it is unclear how things are expected to play out in the second half as corporates digest the first interest rate cuts since March 2020 and ambiguity related to the outcome of the U.S. presidential elections, the geopolitical events and the fate of the U.S. economy.
Early Indications From JPM, C, BAC & GS
The top executives from the above-mentioned large Wall Street players suggested a healthy quarter for the IB business.
Earlier this month, JPMorgan's president and chief operating officer, Daniel Pinto, noted that the third quarter will likely be a “solid” one for its IB business. IB fees are projected to jump 15% year over year and will be driven by robust performance in debt and equity capital markets. Merger & acquisition (M&A) volumes are expected to be “flattish.”
Citigroup's chief finance officer, Mark Mason, stated that the company’s IB fees are anticipated to jump 20% in the third quarter from the year-ago period. The upbeat performance is likely to be driven by solid activity across debt capital markets and M&As.
On the other hand, BAC’s CEO Brian Moynihan projected IB fees to be “basically flattish” year over year. Meanwhile, David Solomon, Goldman’s CEO, did not share expectations related to the IB business. He stated that the business continues to improve, even though activity from financial sponsors has not rebounded as much as expected.
What Lies in Store for JPM, C, BAC & GS in Q4?
With the third quarter almost drawing to a close, let’s try to decipher how the IB business is likely to fare in the fourth quarter of 2024.
The dealmakers are bracing for a slowdown in the global M&A volume ahead of the U.S. elections. Nonetheless, they are optimistic about the deal pipelines and expect a solid rebound beginning in early 2025.
Apart from this, interest rate cuts and a higher chance of the soft landing of the U.S. economy are expected to play a crucial role in the improvement of dealmaking activities.
Hence, the Wall Street players are likely to reap solid profits for the turnaround in the IB business.
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Will JPM, C and Others Follow JEF and Post Solid Q3 IB Income?
After more than two years of drought, investment banking (IB) seems to have recovered.
Investors got the first official glimpse at how the IB business has been playing out across the industry on Wednesday, Sept. 25, when Jefferies (JEF - Free Report) announced its quarterly results. This global investment bank posted IB revenues of $949 million for the third quarter of fiscal 2024, which surged 47% year over year. This was driven by robust advisory and underwriting businesses.
Now, we are waiting for results from other major Wall Street giants like JPMorgan (JPM - Free Report) , Citigroup (C - Free Report) , Bank of America (BAC - Free Report) and Goldman Sachs (GS - Free Report) . JPM and C will kick start earnings season on Oct. 11., with BAC and GS reporting on Oct. 15.
In the first half of 2024, these banks reaped robust returns from a resurgence in the IB business. Yet, it is unclear how things are expected to play out in the second half as corporates digest the first interest rate cuts since March 2020 and ambiguity related to the outcome of the U.S. presidential elections, the geopolitical events and the fate of the U.S. economy.
Early Indications From JPM, C, BAC & GS
The top executives from the above-mentioned large Wall Street players suggested a healthy quarter for the IB business.
Earlier this month, JPMorgan's president and chief operating officer, Daniel Pinto, noted that the third quarter will likely be a “solid” one for its IB business. IB fees are projected to jump 15% year over year and will be driven by robust performance in debt and equity capital markets. Merger & acquisition (M&A) volumes are expected to be “flattish.”
Citigroup's chief finance officer, Mark Mason, stated that the company’s IB fees are anticipated to jump 20% in the third quarter from the year-ago period. The upbeat performance is likely to be driven by solid activity across debt capital markets and M&As.
On the other hand, BAC’s CEO Brian Moynihan projected IB fees to be “basically flattish” year over year. Meanwhile, David Solomon, Goldman’s CEO, did not share expectations related to the IB business. He stated that the business continues to improve, even though activity from financial sponsors has not rebounded as much as expected.
What Lies in Store for JPM, C, BAC & GS in Q4?
With the third quarter almost drawing to a close, let’s try to decipher how the IB business is likely to fare in the fourth quarter of 2024.
The dealmakers are bracing for a slowdown in the global M&A volume ahead of the U.S. elections. Nonetheless, they are optimistic about the deal pipelines and expect a solid rebound beginning in early 2025.
Apart from this, interest rate cuts and a higher chance of the soft landing of the U.S. economy are expected to play a crucial role in the improvement of dealmaking activities.
Hence, the Wall Street players are likely to reap solid profits for the turnaround in the IB business.