WASHINGTON: Volatility following the Brexit vote and changing monetary policy around developed economies (SPY) helped JPMorgan Chase’s (JPM) trading revenue in 3Q16. Equity trading revenue rose 1% to $1.4 billion, while fixed income trading revenue rose 48% to $4.3 billion. Overall, trading revenue rose 21% during the quarter, beating expectations. Government bond trading and interest rate–linked assets primarily drove trading action in the quarter.
During JPM’s earnings call, chief financial officer (or CFO) Marianne Lake emphasized “strong client activity” and changes in money market regulations as the key drivers of the bank’s third-quarter trading revenue. Lake also said that an “improving market sentiment” and “robust issuance volumes” helped credit and securitized product desks. For 4Q16, the bank expects its investment banking fees to be flat year-over-year.
JPMorgan’s investment banking earnings nearly doubled to $2.9 billion, and its revenue rose 16% to $9.5 billion in 3Q16. Growth in this segment was driven by higher equity and debt underwriting fees as well as higher advisory fees. Peers Goldman Sachs (GS), Bank of America (BAC), and Citigroup (C) also expect their trading revenues to improve in their respective third quarters.
