At a recent financial investor conference, JPMorgan Chase (JPM) executives offered a bullish third quarter outlook for its investment and commercial banking divisions. The update comes amid an improving dealmaking market and volatility-driven market activity that has benefited the banking giant. Following the news, JPM stock was up 1.6% on Tuesday.
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Co-CEO of Global Banking in JPM’s Commercial & Investment Bank, Doug Petno, said he expects investment banking revenue to increase by low-double-digit percentage in Q3. He added that the bank’s markets revenue is also expected to grow at a high-teens percentage rate during the same period.
These updated forecasts signal a significant improvement over the bank’s earlier predictions and recent performance. In the second quarter, investment banking fees grew 7% to $2.5 billion.
M&A Revival Drives Investment Banking Rebound
Petno attributed the strong performance in investment banking to a rebound in dealmaking activity.
He noted that while geopolitics has created “a true fog of uncertainty,” clients are successfully “seeing through it and adapting to the volatility created around global trade.” He added that client activity has picked up significantly, making it one of the “busiest summers that we have seen in a long time.”
Finally, the pipeline for mergers and acquisitions looks strong, with an increase in big initial public offerings (IPOs) and equity capital markets activity.
JPM Ramps Up Dealmaking Talent
The bank is preparing to benefit from the M&A rebound by promoting three insiders to lead its investment banking division and manage relationships with top clients.
Also, the company has been actively expanding to meet this rising demand, hiring over 300 bankers in its global banking unit between January and April. This includes senior bankers focused on technology, energy, and activism defense.
However, Petno did caution that this growth could lead to an uptick in compensation-related expenses.
Is JPM a Buy, Sell, or Hold?
Turning to Wall Street, JPM stock has a Moderate Buy consensus rating based on 12 Buys, six Holds, and two Sells assigned in the last three months. At $307.88, the average JPMorgan stock price target implies a 3.6% upside potential.
