Jefferies reported last month and J.P. Morgan was the first big Wall Street bank to follow today, with second quarter results for 2013. If you want to work for Jamie Dimon, this is what you need to know now.
J.P. Morgan has put 'extensive focus' on the 'control agenda', said Jamie Dimon in the press release accompanying today's results. This follows a huge internal investigation and tightening of controls in light of last year's 'London Whale' loss. In April, Dimon said the bank would be 'aggressively strengthening' internal controls as one of its top priorities.
The bank said today that it still expects to make a loss of around $300m from the CIO every quarter.
J.P. Morgan's debt capital markets (DCM) and equity capital markets (ECM) businesses are doing amazing well. In the second quarter, revenues in DCM rose 50% year-on-year. In ECM they rose 83%. The bank said this was its best quarter ever in capital markets. Hiring may ensue.
The M&A market isn't looking too hot. Nor are J.P. Morgan's M&A revenues: they fell 15% in the second quarter. We suggest that M&A at J.P.Morgan doesn't look like an area where hiring will be happening soon.
Excluding the impact of debt valuation adjustment (DVA - an accounting measure), the compensation ratio in J.P. Morgan's corporate and investment bank is now 31%, down from 33% in the second quarter of 2013. J.P. Morgan is clearly watching compensation costs.
However, the press release also pointed to an 8% increase in overall costs and attributed this to higher pay on the back of rising revenues, suggesting that bankers at J.P. Morgan will be paid more this year than last year - even if they're receiving a smaller slice of the pie.
J.P. Morgan is de-risking. Average value at risk (VaR) fell 47% year-on-year in the second quarter.
Revenues for both equities and fixed income trading increased by 17% at J.P. Morgan in the second quarter. However, in the past six months equities trading revenues increased most of all and were up 7% vs. an increase of only 4% in fixed income. J.P. Morgan is one of the market leaders when it comes to equities sales and trading. Earlier this year, it cut 24 equities salespeople and traders. Maybe this was a little over-zealous?
If you're an investment banker, J.P. Morgan still looks a very secure bank to work for. In February, Jamie Dimon said J.P. Morgan would cut 17,000 jobs over the next two years - all from branch offices and mortgage servicing units. However, with the exception of its equities job cuts, J.P. Morgan has so far seemed unwilling to trim people from its investment bank. This remained the case in the second quarter, when headcount across the corporate and investment bank fell by just 1%.
