Bankers who went into 2025 expecting a strong year with solid fees and improved job security are finding that things have not gone to plan. Deals that were due to happen are delayed. But the work goes on.
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Speaking on today’s investor call following the bank’s first quarter results release, JPMorgan CFO Jeremy Barnum said “client dialogue is elevated,” while outcomes from the investment banking pipeline are stunted. There’s a “wait and see attitude” said Barnum: at some point there will be M&A and other investment banking activity relating to “optimizing supply chains.” For the moment, clients are sitting on their hands.
The implication is that senior bankers are busier than ever visiting clients for “dialogue” on implications of Trump’s tariffs, but that fees for their work are not forthcoming. Bankers are working hard for nothing, at least in the short term.
JPMorgan said today that fees earned by its investment bankers rose 12% year-on-year in the three months through to the end of March, with debt capital markets and M&A revenues rising 16%, even as equity capital markets revenues fell 9%. “Investment banking this quarter was fine,” said Barnum.
However, the first quarter doesn’t cover the impact of Trump’s tariffs, implemented on April 3rd. IPOs have been put on hold as a result and are “pretty much off the table for most rational people,” in the words of Cully Davis, Citi’s head of growth equity. M&A deals are delayed as corporates reconsider the implications of tariffs that may – or may not – be imposed. Prada, for example, this week cut its purchase price for Versace by $200m to $1.4bn because of the trade war. Debt capital markets (DCM) issuance may also fall amid uncertainty and rising credit spreads.
At worst, banking fees in the second quarter could plummet to post-COVID levels or below. If they do, JPMorgan and other banks may finally pull the trigger on bankers retained in the hope that revenues would recover. With senior bankers busy on client handholding and trying to drum up deals, junior bankers will be first to go. Those who remain will likely have to work harder on relentless and often pointless pitchbooks, enhanced due diligence, and market intelligence, says one junior at a rival bank.
For the moment, though, JPMorgan doesn’t have additional plans to cut bankers. Instead, Barnum said tody that the bank actually hired extra front office bankers and technology staff in the first quarter. Dimon said today that cost cutting at the bank will be focused on removing bureaucracy and inefficiency. It’s like “eating greens,” Dimon added – the bank has to do it and hasn’t in a while.
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