JPMorgan's chief executive plans to continue aggressive hiring globally in an effort to grab market share from rivals. Despite sluggish second-quarter revenue, Jamie Dimon says he's looking to add products, locations and staff in the firm's three key divisions - investment banking, asset management and Treasury and Securities Services (TSS) - in all regions beyond North America.
That would extend last quarter's very aggressive hiring that saw the investment bank division's work force swell by 1,300 heads, or 5 percent, to 26,279 as of June 30. That's the division's largest headcount since the end of 2008. For the parent JPMorgan Chase & Co., total headcount climbed 3 percent during the second quarter, to 232,939.
While staffing grew, investment banking division revenue of $6.33 billion was down 24 percent from this year's first quarter and down 13 compared with the second quarter of 2009. The downturn was largely due to fixed income markets, where revenue declined 35 percent from the first quarter and 28 percent from the year-earlier period, to $3.56 billion.
Nevertheless, Dimon told investors in a conference call following the bank's second-quarter earnings release:
Investment banking, asset management and treasury are very global businesses, and they've been global for a long time. We're talking about augmenting and accelerating some of that. Whether it's in terms of new locations for TSS or asset management, we're always adding product and bankers. In terms of investment banking, there's going to be more bankers, more countries, more coverage, more research. That's not just in the BRICs (Brazil, Russia, India, China) but in other countries around the world.
He adds JP Morgan will fight for market share "inch by inch," with "better bankers, more product, more services, more coverage of clients. We will earn share."
Compensation expense as a percent of total net revenue for the investment bank edged up to 37 percent in the second quarter (after factoring out $550 million expense attributable to the one-time UK government bonus tax) from 35 percent in the first quarter.
The hiring binge is clearly showing up in expenses. In TSS, for example, noninterest expense was $1.4 billion, up 9 percent from a year ago. The increase is partly due to higher performance-based compensation as well as new and continued investment in new product platforms, primarily related to international expansion, the company says. In asset management, expenses grew 4 percent year-over-year, in part due to higher headcount.