Saturday 24 March 2018

Mark Doyle: Short view

LAST week, US bank JP Morgan was the first of the big Wall Street firms to report profits for the last quarter. Analysts were tentatively suggesting that the worst was behind this behemoth of a bank -- and it seems they were right.

JP Morgan registered profits of nearly $5bn for the last quarter, setting expectations sky high for 2011. The share price, which peaked at $58 a decade ago, is now trading at about $45, having slumped as low as $16 in early 2009.

The legendary investment banking division of the firm is also back in business and produced revenues itself of about $6.2bn in the quarter alone. A big chunk of this money came from JP Morgan's ability to find over $1.4 trillion of debt and equity for its clients last year. However, this money is not the bank's -- rather it belongs to other investors. So essentially, this end of the business is one giant match-making machine escorting investors to the match-makers' ball.

But to go to the ball you have to buy a ticket -- and guess who sells the tickets? It's always been this way and JP Morgan has the best address book in the business.

The good news is that lots of people want to come to the ball these days and this means a better balance in demand and supply of capital resulting in normality returning to capital markets.

Being the middle man like JP Morgan, requires lots of meetings, lots of pitching up and lots of entertainment -- golf for example, sure it's where the real business is discussed except, that is, in Ireland's case. Sadly we remain barred from the ball for now. Was this down to our bad behaviour on the golf course?

Max Doyle is a principal of Prime Focus Management

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