JPMorgan Chase (NYSE:JPM) upped its investment banking (IB) revenue forecast for the second quarter of 2024. Speaking at the Morgan Stanley U.S. Financials, Payments & CRE Conference, Troy Rohrbaugh, co-CEO of JPM’s corporate and investment bank (CIB), shared that the firm now expects an impressive 25% to 30% increase in IB revenue for Q2. That’s quite an improvement from the mid-teen percentage growth the firm predicted in May.
This new outlook shows JPMorgan’s confidence in the current capital market environment. Rohrbaugh emphasized that the “capital markets continue to be extremely robust” and that their “overall franchise has improved,” with the bank gaining market share in the IB segment.
JPM’s upbeat outlook shows that the momentum in the IB segment will likely be sustained despite structural headwinds from the regulatory environment. It’s worth noting that JPM’s IB revenue jumped by 27% year-over-year in Q1 of 2024.
Trading Revenue Is on the Rise Too
In addition to its rapid growth in IB revenue, JPM is seeing positive signs in its trading revenue. Rohrbaugh said that the trading revenues are trending slightly better than the company’s forecast, and he expects them to exceed the bank’s earlier estimate of a mid-single-digit percentage gain.
The second quarter will mark a recovery in trading revenue, which declined by 5% in the first quarter.
Earnings Under Pressure
JPMorgan will release its Q2 financials on Friday, July 12, and Wall Street analysts predict that the bank’s earnings might come under pressure. Analysts expect JPM to report earnings of $4.14 per share in Q2, down from $4.75 in the prior-year quarter. This dip could be due to lower deposits and deposit margin compression, which will likely affect earnings.
On the brighter side, analysts are expecting JPMorgan to report revenue of $41.5 billion for Q2, driven by improvements in net interest income along with the expected gains in IB and trading revenues.
Is JPM a Buy or Sell?
Wall Street analysts are bullish about JPM’s prospects ahead of the Q2 print. It has 18 Buys and five Hold recommendations for a Strong Buy consensus rating.
JPM stock has gained over 38% in one year. The analysts’ price target on JPM stock is $213.96, implying 11.71% upside potential from current levels.
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