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JPMorgan (JPM) Expects Trading to Continue 'Normalizing' in Q3

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At the Barclays investors’ conference, JPMorgan (JPM - Free Report) pointed out that trading business continued to “normalize” in the third quarter of 2021. Per Marianne Lake, the co-CEO of the company’s Consumer and Community Bank segment, both markets and investment banking (IB) results in the quarter are projected to be better than expected.

Lake noted that markets revenues are likely to decline 10% both year over year and sequentially as trading keeps normalizing from exceptionally high levels in 2020. She said, “We’re seeing particular strength in equities, a little less so in FICC.” Almost similar views were echoed by Citigroup’s (C - Free Report) chief finance officer Mark Mason, who stated that trading revenues at the company will likely fall by a “low-to-mid teens” percentage from the prior-year period.

Likewise, trading businesses for Bank of America (BAC - Free Report) , Morgan Stanley (MS - Free Report) , and Goldman Sachs are likely to continue normalizing during the third quarter.

Now coming to IB business, Lake believes that IB fees will rise from the prior-year quarter on the back of “continued momentum” in global M&As. At the second-quarter earnings call, JPMorgan had expected the same to be “up year-on-year but down sequentially” following a robust quarterly performance. The company still projects the same view but “more up year-on-year and less down sequentially” than previously anticipated.

Further, JPMorgan’s consumer credit-card spending is up almost 20% from the 2019-level, though “the Delta variant has a little bit knocked consumer confidence, at least temporarily.”

Besides providing third-quarter guidance, JPMorgan reiterated its net interest income (NII) target of $52.5 billion for this year. The company, however, didn’t give any guidance for NII for 2022.  

Over the past year, shares of JPMorgan have jumped 57.5% compared with the industry’s rise of 59.1%.

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Currently, JPMorgan carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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