JPMorgan Reports A 50% Drop In Advisory Revenue As The Wall Street Deal Slump Continues.

Wall Street isn’t getting any better as the deal-making slowdown continues. During a conference call on Tuesday, JPMorgan Chase’s president and chief operating officer Daniel Pinto predicted that investment banking revenue would decline by 45% to 50% in the third quarter compared with a year ago. The bank posted $3.3 billion in third-quarter investment banking revenue last year amid what was then a bull market for IPOs, stock issuance, and other deals. Now, Wall Street is experiencing steep declines in capital market activity as IPOs and mergers stall following the worst first half in stocks since 1970. The bull market for bankers has turned into a bust this year, and compensation and jobs are expected to be cut in the coming months.

Yesterday, Goldman Sachs was the first major Wall Street firm to announce that it would be reducing headcount by hundreds of jobs in the coming months. Upon being asked whether JPMorgan would follow suit with its own layoffs, Pinto responded that “over time” the bank will adjust its employee base as a result of global investment banking opportunities. That is, in his view, what the industry earned in 2020, he said. Pinto said that the total pool of investment banking fees jumped from about $79 billion in 2019, before the pandemic, to $95 billion in 2020 and $123 billion last year. He said that the fee pool is expected to shrink to $69 billion in 2022, but Pinto believes that it will eventually rebound to 2020 levels. He noted that JPMorgan could adjust its cost structure by cutting jobs and reducing the size of employee bonuses.

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