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JPMorgan's Daniel Pinto on when banking (and hiring) will recover

Pinto's pronouncements

What will it take for banking revenues and by proxy banking jobs to make a comeback? 

Speaking today, Daniel Pinto, head of JPMorgan's investment bank and the bank's president and COO said it's all about one thing: certainty. "At the moment, there's too much uncertainty about inflation and valuations," he declared. 

As we reported earlier this week, this year's investment banking fees are currently at a five-year low. Citing figures from banking intelligence firm Coalition, Pinto said today that this year's wallet for investment banking division revenues is likely to be around $70bn, down from the $78bn achieved last year (which was roughly in line with 2019) and down considerably from the peak of $133bn achieved in 2021. 

Will 2024 be any better? Yes, but not a lot. Pinto is predicting $80bn of investment banking revenues across the market next year. In the medium term, he thinks the range will go from $80bn to $95bn.

It's not just the total number that's important, though, it's also the distribution of revenues between the business areas in the investment banking division (M&A and equity and debt capital markets). Last year, Pinto noted that revenues skewed towards M&A. This year, he said things are normalizing and ECM and DCM (particularly DCM) are getting more of the action.

In the long term, Pinto suggested that it will help to work for a large investment bank (ie. JPMorgan). As market share consolidates in leading players, he said only leading players will be able to generate viable profits. This is particularly the case in sales and trading, where the top five players have gained four percentage points between them since 2020. “You can only be profitable if you are a player in scale” said Pinto. While "peripheral players" gain market share for a bit, he says they need a lot more market share to be profitable and sustainable. "The bigger players have the competitive advantage", and the ability to invest in a superior product.  

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