J.P. Morgan boss predicts banks’ trading slump gone after pandemic: report

But shareholders may not share the same optimism once they see investment banks’ Q2 results.

J.P. Morgan’s bosses are optimistic that banks’ decade-long revenue slump from trading will come to an end post-COVID.

Speaking with Bloomberg, Daniel Pinto, the bank’s co-president and co-chief operating officer, said that the industry’s collective revenue from trading—its “wallet”—probably reached its nadir before the pandemic. From those depths, things are likely to improve for years to come. That is, setting aside 2020.

“You’re going to have, over time, an increasing wallet,” said Pinto. Post-crisis regulations and changes in market structure, such as electronification, that squeezed margins are now mostly in place, and the system is working well, he added. “From here you would expect that as the world grows and capital markets grow, the trading businesses will grow.”

But it may be hard for shareholders to remember that optimism in the coming months as investment banks face tough comparisons with 2020’s bonanza. J.P. Morgan and Goldman Sachs are set to kick off second quarter earnings announcements in the third week of July. Already, J.P. Morgan CEO Jamie Dimon signalled a potential 38% decline from a year earlier.

Read more from Bloomberg.

Photo courtesy of Joe Mabel (Wikimedia Commons)