J.P. Morgan isn't rushing to move its staff out of the UK, the huge FICC Brexit bounce

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J.P. Morgan’s Q2 results suggest that investment banks’ trading businesses are indeed benefiting from a Brexit bounce. Its markets business was up 23% year on year as its investment bank increased revenues by 5%.

But with senior bankers across the City unimpressed by Jamie Dimon’s continued comments about the potential need to shift people out of the UK after the Brexit vote, J.P. Morgan bankers can at least be slightly reassured by CFO Marianne Lake’s comments today that “in an ideal world” its operations in Britain would remain exactly as they are.

J.P. Morgan will continue to “evaluate the landscape in the coming weeks, months and quarters”, said Lake. Jamie Dimon, who is nursing a sore throat and let Lake do most of the talking during the Q2 conference call, said he hoped both EU and UK governments would be “sensible” to minimise disruption to businesses and that J.P. Morgan will continue to serve clients across Europe, even if it means more costs.

That was that. Anyone hoping for more detail on post-Brexit plans is still left wanting and this is likely to be the way it plays out as more U.S. banks report their Q2 results this week.

J.P. Morgan’s fixed income traders made 35% more than the comparable period in 2015 – which was particularly weak – or $3.95bn, thanks to a huge uptick in trading volumes both before and after the Brexit vote. Rates traders were the stars, it said, but there was solid performance across currencies, emerging markets, credit and securitised products too.

Brexit brought big volumes to J.P. Morgan’s trading desk and it was able to service these requests throughout, it said.

Equities trading revenues also increased by 2%, to $1.6bn – against a strong Q2 in 2015. Asia contributed to strong revenues last year, but the dynamic has shifted to Europe in 2016 thanks to post-Brexit activity, said Lake.

If all of this seems positive, bear in mind that J.P. Morgan’s advisory business has slowed. M&A revenues were flat on Q2 last year, but revenues slid by 20% on the previous quarter. Equity capital markets revenues were down 37% on Q2 2015, while debt capital markets were largely flat.

Lake said that while the uncertainty brought about by Brexit was not conducive to M&A, the “strategic dialogue” in the boardrooms was “as good as ever”.

Headcount in J.P. Morgan’s corporate and investment bank was down by a mere 1% year on year and 262 people departed over the second quarter. For the year so far, pay averages out at $109k per head, down from $114k at this point last year.

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