Daniel Pinto, CEO of JPMorgan Corporate and Investment Bank.
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The slowdown in dealmaking that has affected Wall Street this year shows no signs of abating.
Investment banking revenue in c. B. Morgan Chase There was a 45% to 50% decline in the third quarter from a year earlier, President and Chief Operating Officer Daniel Pinto said Tuesday during a conference.
The bank reported $3.3 billion in investment banking revenue for the third quarter last year, amid what was then a bull market for initial public offerings, stock issuance and other deals.
Wall Street is now grappling with sharp drops in capital market activity as initial public offerings slow and mergers falter after stocks experienced their worst first halving since 1970. Bankers’ bull market has turned into a crash this year, and companies Compensation and job cuts are expected in the coming months.
yesterday, Goldman Sachs Became the first major Wall Street company to admit it was understaffing Cut hundreds of jobs This month.
When asked if JPMorgan would follow suit with its layoffs, Pinto replied that “over time” the bank would adjust its staff base to match opportunities in global investment banking.
Vision 2020
He said that, in his view, is about what the industry has achieved in 2020.
Pinto said total 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 total fees are expected to shrink to $69 billion in 2022, but Pinto believes it will eventually return to 2020 levels.
He said JPMorgan could adjust the cost structure not only by cutting jobs, but also by reducing the size of employee bonuses.
“The banking business has a large component of variable compensation,” Pinto said. “You can’t just adjust by letting people go, you can adjust by reducing costs.”
He added that managers still had to “be very careful when you have a little bit of deflation” not to go too deep as that would hurt business when volumes return.
However, trading has provided a welcome boost this year.
JPMorgan said markets returns are heading for a 5% increase from a year earlier, as strong fixed income activity offset lower equity trading returns. A year ago, the division reported revenue of $6.27 billion.
Read more: Wall Street layoffs likely as two-year employment boom turns to slump
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