J.P. Morgan investment bankers and traders outpace Citi rivals with massive Q2

J.P. Morgan and Citigroup each booked strong second quarter performances, with profits increasing 18% and 16%, respectively. But J.P. Morgan’s investment bank and securities businesses shined in Q2, shattering expectations on route to a big payday for its bankers and traders.

Investment banking fees at J.P. Morgan were record-breaking, reaching nearly $2.2 billion on the back of a 24% increase in M&A fees compared to a 14% jump at Citi. IPO bankers also fared well at Citigroup, increasing fees by 8% to $335m. At JPM, meanwhile, equity underwriting revenues were up a ridiculous 49% to $570m. Each business line was expected to show marked signs of improvement with M&A and IPO activity spiking during Q2, but J.P. Morgan bankers took better advantage of the environment. Debt underwriting fees were down 1% at J.P. Morgan and 20% at Citi year-over-year.

In sales and trading, J.P. Morgan was particularly adept. Markets revenues were expected to remain somewhat flat during the second quarter as average trading volume on the NYSE declined by more than 8% between quarters. Yet J.P. Morgan’s markets revenues increased 13% to $5.4b, beating expectations by $500m. Equity trading revenues were up 24% year-over-year while fixed income revenues climbed 7%.

Meanwhile, Citi’s markets revenues met street expectations, falling by 1% to $4.5b. Equities traders did well, however, increasing revenues by 19%. The gains were offset by Citi’s fixed income business, which saw revenues decrease by 6% year-over-year.

The end result is a financial windfall for investment bankers and traders at J.P. Morgan. Compensation totals within its corporate and investment bank (CIB) were up 11% compared to Q2 of 2017. The bank shed around 800 jobs overall during the quarter, but added more than 200 staffers within its CIB. Compensation at Citi remained flat.

The results suggest that Goldman Sachs and Morgan Stanley may be next week’s earnings darlings. Both banks rely heavily on their huge investment banking and markets businesses, though JPM’s traders could have simply had a banner quarter that won’t be replicated by rivals.

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