JPMorgan hit by worst quarter since crash despite bumper year
JPMorgan's bond traders have suffered their worst quarter in a decade.
Revenue from fixed-income trading, typically the biggest contributor to the company's markets business, plunged 18pc in the fourth quarter to the lowest since the depths of the financial crisis as wild markets kept clients on the sidelines.
The drop more than outweighed an increase in equity-trading revenue and advisory fees, making for the corporate and investment bank's worst quarter in three years.
"Challenging market conditions" weighed on credit trading, rates and commodities, the bank said yesterday in a statement.
The fourth-quarter slump was a sour end to what was still the most profitable year in banking history, boosted by the Trump administration's tax cuts and rising interest rates. While JPMorgan's quarterly profit was just shy of analysts' estimates, annual earnings jumped 33pc to $32.5bn (€28.5bn), almost $8bn above the previous record.
The bleak bond-trading results followed a similar drop Citigroup reported on Monday, shedding further light on Wall Street's struggle to cope with one of the most volatile fourth quarters in recent memory. Citigroup chief financial officer John Gerspach said on Monday that the trading environment had started to improve this month.
The results were "very un-JPMorgan-like," Steven Chubak, a bank analyst at Wolfe Research, wrote in a note to clients.
"JPMorgan has a strong track record of delivering strong revenue and earnings beats, and these results appear rather unremarkable," Mr Chubak added.
JPMorgan CEO Jamie Dimon said in early December that revenue from trading would be roughly flat in the fourth quarter as trade tensions, Chinese selling of US Treasuries and the reversal of central-bank stimulus roiled markets.