It sounds like Wall Street banks are having a strong fourth quarter.
JPMorgan CEO Jamie Dimon and Bank of America Merrill Lynch CEO Brian Moynihan both shed some light on their firms’ performance in the markets business, speaking at the Goldman Sachs Financial Services Conference on Tuesday.
JPMorgan’s markets division is up about 15% year-over-year in the fourth quarter, Dimon said, while BAML’s fixed income, currency, and commodities sales and trading division is up 15% quarter-to-date versus last year, according to Moynihan.
The quarter was marked by President-elect Donald Trump’s surprise electoral win in early November. In the second quarter, markets businesses across Wall Street saw an uptick in activity following Britain’s surprise decision to leave the EU.
FICC sales and trading businesses have had a rough run of it in recent years, with revenues falling 9% across Wall Street in 2015.
The business started to pick back up for some firms in the second and third quarters of this year.
That said, Dimon said his firm’s FICC business is still down about 25% from peak levels. Maybe half of that is “gone forever,” he said, while the rest may be cyclical and could come back.
He reiterated that JPMorgan is investing in the FICC business for the long term and expects the “material” businesses such as bonds and underwriting to grow over time.
“We have been very consistent in this business,” Dimon said. “It’s a good long-term business.”
“It’s had a secular downturn” combined with a cyclical downturn, but eventually some businesses, such as rates, will reprice, he said.
JPMorgan is well positioned for that because of its scale and the way it has embraced technological advances in the business, Dimon said.
As for BAML’s FICC performance, Moynihan said, “We feel good about that.” Investment banking revenues at that firm, however, will be down from the year-ago quarter, he said.