Here’s an interesting footnote to JP Morgan’s consensus-crushing earnings released on Wednesday.
Net revenue was $7.5 billion, an increase of $3.4 billion, or 85%, from the prior year. Investment banking fees were up 4% to $1.7 billion, consisting of equity underwriting fees of $681 million (up 31%), debt underwriting fees of $593 million (up 19%) and advisory fees of $384 million (down 33%). Fixed Income Markets revenue was $5.0 billion, up by $4.2 billion, reflecting strong results across most products and gains of approximately $400 million on legacy leveraged lending and mortgage-related positions, compared with markdowns of $3.6 billion in the prior year.
And below is the bank’s recent fixed income performance in very rough chart-form.
These are based on charts first produced by James Kwak, of the Baseline Scenario, for JPM’s first-quarter 2009 results. Back then he noted that the bank would need to reproduce its record-breaking performance in fixed income to produce another record-breaking net revenue number for the investment banking unit.
And while JPM didn’t manage to make another record IB revenue number in Q3 (or Q2 for that matter) it is still growing profits in its fixed income division — albeit very slightly compared to Q2.
The key question now is whether the amazingly benign fixed income environment that has been around since the start of 2009, will continue into Q4 and beyond.
Oh, and for those wondering why there’s been an overall decline in JPM’s investment banking revenues — here’s a hint (we think…third line from the bottom) from the bank’s Q3 financial supplement:
Related link:
JPMorgan profits surge to $3.6bn – FT
Whitney: “I call this the great government momentum trade” – FT Alphaville