In a chart
Cash can be king in times of crisis. But for the top investment banks helping the Federal Reserve do “whatever happens” to maintain credit flow during the epidemic, the ace has been a capital market fee in the hole.
to take JPMorgan, Chase & Company. (JPM) which reported revenue of $ 33.8 billion for the second quarter on Tuesday, despite a coronova recession, and a 54% jump in investment banking fees from a year earlier.
A team led by Jesse Rosenthal, head of research at the American financial company for Creditors, wrote in a note following the bank’s results, “Not to be a cheerleader, but 2Q20 showed JPM to be an industry leader.”
Citigroup Inc.. (C) also reported a $ 19.8 billion increase in revenue in the second quarter on Tuesday, a 68% jump in fixed income trading revenue and a 131% jump in investment-grade debt underwriting activity from a year earlier.
In an interview on Tuesday, S&P Global Ratings primary credit analyst Stuart Plesser said, “The Fed plays a big part of that, because they have actually opened up capital markets.”
He pointed to the record of recently issued bond issuances by both US investment-grade and high-yielding companies during the epidemic, as exemplified by many of the world’s largest investment banks as the Fed provided emergency facilities Has offered more than $ 2 trillion and major corporations have raced to make war chests this year.
“He generates large fees,” Placer said of investment-banks, even though he expects capital market activity to return to more “normal” levels in the second half of the year.
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This chart from S&P shows capital market revenues at large investment banks, already over $ 40 billion in the first quarter, the highest level in five years.
Capital market fees are the main
The credit-rating firm also described how JPMorgan and Citigroup have led their peers in capital market revenue for most years since 2010.
How the majors stack up
The Federal Reserve has increased its balance sheet to more than $ 7 trillion from $ 4 trillion nearly a year ago in an effort to compensate for the US economic decline during the epidemic.
The big banks closed the corporate income season on Tuesday. The Dow Jones Industrial Average (DJIA) S&P 500 Index (SPX) and Nasdaq Composite (COMP) ended the session sharply after the Federal Reserve Gov. Lyle Brainard called for the continuation of large-scale asset purchases by the US central bank to help accelerate the economy. Amid the “dense fog of uncertainty” brought by COVID-19.
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