JPMorgan Chase Sees Mid-Teens Growth in Q3 Banking Fees and Markets Revenue

Key Points

• JPMorgan expects mid- to high-teens year-over-year growth in third-quarter investment-banking fees and markets revenue, supported by broad strength across products, regions, fixed income, currencies, commodities and equities.
• Client activity and credit quality remain resilient, with nonperforming CIB loans below $5 billion and second-quarter net charge-offs near 12 basis points, though the bank is monitoring AI disruption, lower-income consumers and geopolitical and commodity risks.
• JPMorgan continues investing in strategic growth areas, including payments, blockchain and domestic manufacturing, while maintaining disciplined underwriting and selective exposure to AI-related borrowers and private-equity investments.

Doug Petno, co-president and CEO of the Commercial and Investment Bank at JPMorgan Chase & Co. NYSE: JPM, said the bank expects broad-based strength in investment banking and markets during the third quarter, while emphasizing that the firm is maintaining underwriting and capital-allocation discipline amid favorable but potentially late-cycle market conditions.

Petno, who was recently named co-president alongside Troy Rohrbaugh as part of the firm’s succession planning process, said his expanded firmwide responsibilities are not expected to materially alter day-to-day management of the Commercial and Investment Bank, or CIB. He said the CIB’s operating businesses have autonomous leadership teams and a “high-functioning operating committee.”

“It would be risky to suggest that I don’t run the CIB,” Petno said, adding that Chief Executive Jamie Dimon remains “as active as ever” and client-facing.

Third-Quarter Outlook

Petno said JPMorgan expects third-quarter investment-banking fees to rise by the mid- to high-teens percentage range from a year earlier, absent a major market disruption. He cited strength across products and geographies, a strong pipeline and increased management and board confidence supporting merger-and-acquisition activity.

Markets revenue is also expected to increase by the mid- to high-teens percentage range, supported by broad-based strength across fixed income, currencies and commodities, or FIC, and equities. Petno noted that the expected result would include a seasonal sequential decline from the second quarter, which he described as a record period for the business.

He said any revenue-, volume- or compensation-related expense associated with outperformance could affect the firm’s expense guidance, though he characterized such costs as “good expenses.”

Petno attributed the CIB’s momentum to years of investment in banking, markets and client coverage, including closer coordination between commercial banking, investment banking and markets businesses. He said the firm is focused on gaining market share rather than simply preserving top industry rankings.

Client Sentiment and Credit Conditions

Despite geopolitical uncertainty, elevated oil prices and hawkish central banks, Petno said JPMorgan’s clients have remained resilient. He described the U.S. economy as a relative global bright spot and said the bank was seeing few broad warning signs in client activity or credit behavior.

Still, Petno said JPMorgan is monitoring companies exposed to artificial-intelligence disruption, lower-income consumer spending and certain commodity-related pressures. He also cited potential risks for clients if the Strait of Hormuz remains closed, including businesses affected by oil, fertilizer, aluminum and refined-product costs.

The CIB’s nonperforming loans were below $5 billion, while second-quarter net charge-offs were about 12 basis points, Petno said. He said the bank actively manages its loan portfolio and works proactively with clients that could face stress.

Demand for commercial and industrial loans has been supported by spending related to AI, manufacturing, working capital and cash-funded M&A, he said. However, Petno said the bank is being selective in financing AI-related borrowers and maintaining exposure limits for frontier-model companies and hyperscalers.

Private Capital, Payments and Strategic Financing

Petno said the private-credit market is “open for business,” with institutional fundraising remaining sound and redemption pressures under control. He said the bank expects private equity sponsors to continue deploying capital and monetizing investments, although investments made in 2019 through 2021 could face challenges because of higher leverage, lower interest rates at purchase and elevated acquisition multiples.

He said sponsor-backed companies accounted for about 25% of U.S. and global IPOs so far this year, while sponsor M&A was up about 6% and exceeded $1 trillion.

In payments, Petno said the CIB generates more than $5 billion in quarterly revenue and processes roughly $12 trillion to $13 trillion of payments daily. The business has doubled revenue over the past five years, he said, driven by a strategy centered on becoming clients’ primary operating bank and expanding global, cross-border and real-time payment capabilities.

Petno also discussed the firm’s Kinexys blockchain business, saying it has moved more than $4 trillion since inception and about $5 billion a day. He described institutional blockchain and stablecoin demand as nascent, citing interoperability, regulatory and know-your-customer challenges. JPMorgan can build a stablecoin quickly if needed, he said, but does not currently see substantial institutional demand outside crypto-related activity.

Security and Resiliency Initiative

One year after launching its Security and Resiliency Initiative, Petno said JPMorgan has provided $200 billion of financing across 1,600 companies and 330 capital-markets transactions. The initiative targets $1.5 trillion of financing over 10 years across frontier technology, applied manufacturing, remilitarization and healthcare, alongside a $10 billion equity commitment.

Petno said the need for financing is larger than initially expected, particularly for rebuilding domestic manufacturing and shipbuilding capacity, addressing supply-chain vulnerabilities, supporting defense capabilities and funding the AI and energy transitions.

Looking at returns, Petno said JPMorgan’s 16% target represents its estimate of a through-the-cycle return given economic and regulatory uncertainty. He said the CIB produced an 18% return on equity last year and 22% in the first half, while continuing to invest in technology, data, cybersecurity, resiliency and growth opportunities.

About JPMorgan Chase & Co. (NYSE:JPM)

JPMorgan Chase & Co is a global financial services company headquartered in New York City. Through its businesses, the company provides banking, lending, payments, investment banking, asset management and wealth management services to consumers, businesses, institutional clients and governments.

The company operates through four primary business areas: Consumer & Community Banking; Commercial & Investment Banking; Asset & Wealth Management; and Corporate. Its offerings include deposit accounts, credit cards, mortgages, auto loans, business banking, commercial lending, treasury services, investment banking, securities trading, investment management and private banking.

JPMorgan Chase serves customers in the United States and maintains operations and client relationships across numerous international markets.

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