JPMorgan Chase (JPM) expects that its investment banking fees will be 45% higher than a year ago in the fourth quarter as deals on Wall Street heat-up.
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Marianne Lake, the CEO of JPMorgan’s consumer and community banking unit, made the comments about skyrocketing investment banking fees at a financial services conference in New York hosted by Goldman Sachs (GS). Lake added that trading fees for buying and selling stocks are likely to increase 15% in Q4 of this year.
Investment banking fees earned on deals such as mergers and acquisitions (M&A) and initial public offerings (IPOs) have been rising across Wall Street throughout the year. In the third quarter, JPMorgan’s investment banking fees increased 31% from a year earlier. JPMorgan Chase is the world’s largest commercial bank with assets under management of more than $3 trillion.
Bull Market Fuels Deals
With stocks trading at record highs, interest rates moving lower, and the U.S. economy strong, the appetite for deals on Wall Street is growing, said Lake. She added that net interest income, which is the difference between what banks earn on loans and pay on deposits, should be $2 billion higher than previously estimated at the end of the current quarter.
Gains in investment banking, stock trading, and rising interest payments have helped JPMorgan Chase post strong financial results throughout this year, powering its own stock to a 47% gain. JPM stock rose another 1.7% immediately after Lake’s comments, before pulling back to trade flat on the day.
Lake is a potential candidate to succeed JPMorgan Chase’s long-time CEO Jamie Dimon when he retires.
Is JPM Stock a Buy?
The stock of JPMorgan Chase has a consensus Moderate Buy rating among 16 Wall Street analysts. That rating is based on nine Buy, six Hold, and one Sell recommendations issued in the last three months. The average JPM price target of $248.14 implies 1.70% upside from current levels.
