Jamie Dimon, CEO of J.P. Morgan, has been speaking about the future of the business. In a Q&A at the Bernstein Annual Strategic Decisions conference, Dimon gave some indication about where the bank was heading. Here’s what you need to know.
1. J.P. Morgan definitely won’t be closing any FICC businesses
Dimon believes that the “secular decline in FICC is over". J.P. Morgan’s FICC business is like a “store” and clients expect “milk, lettuce, tomatoes…all the different things” when they go into that store. The concept of not offering a product, therefore, is counter-productive.
2. But equities is likely to be a better place to be this year
Dimon said that trading volumes at J.P. Morgan in Q2 are going to be pretty much on a par with the same period in 2014 – or around $4.8bn. Beyond that, there was little visibility on which areas of J.P. Morgan’s trading business are currently good places to work. However, equities is expected to be “a little better” than the same period in 2014.
3. J.P. Morgan will not be cutting pay to drive down costs
J.P. Morgan needs to cut $2.8bn in costs and Dimon says that they’ve cut $1.5bn already. The remaining $1.3bn will come from “better back office processing, real estate rationalisation and better electronification.” While the latter inevitably implies more job cuts on the trading floor, Dimon played down any potential job cuts and said that J.P. Morgan would “continue to pay for performance” and is determined not lose talent by paying less than the competition.
4. Expansion in retail banking could mean more investment banking jobs
Dimon says that there are “seven or eight metropolitan areas” where J.P. Morgan doesn’t have a significant enough presence that they could go in and “open 60 branches” rather than taking a tentative steps into a new location. This would also mean an increase in “middle market, asset management and maybe even investment banking – the whole platform”.
5. But there will be headcount cuts in retail banking
Inevitably, as most banks cut back on their retail presence, job cuts are likely at J.P. Morgan at a retail level. Dimon suggests that there will be 5,000 job cuts, and this will amount to “one per branch” and that while they’ll be getting rid of “two tellers”, they’ll be adding financial advisers and salespeople.
6. FICC is not central to the bank’s expansion
Bullishly Dimon suggests that 2015 could be a “record year” for J.P. Morgan, which is targeting an additional $10bn in revenues. But pressure is not on the FICC engine room to start firing again. Dimon says that this figure is independent of any recovery in FICC revenues: “If FICC recovers, we’ll add to that figure”.