JPMorgan Chase & Co. (NYSE: JPM) executives reported broad-based strength across its Commercial & Investment Bank during a presentation at the Barclays Global Financial Services Conference on Tuesday. Doug Petno, the bank's co-president and CEO of the Commercial & Investment Bank, stated that the bank is seeing strong activity across investment banking products and geographies.
Regarding financial performance, JPMorgan expects third-quarter investment banking fees to rise by a mid-to-high-teens percentage, assuming no major market disruption. Markets revenue is also forecasted to increase by a mid-to-high-teens percentage, with strength across Fixed Income, Currencies, and Commodities (FICC) and equities. Petno noted that this forecast includes a seasonal sequential decline from a record second quarter.
On the economic outlook, Petno stated that JPMorgan does not see "anything flashing red" and sees very little "flashing yellow" across the U.S. economy. The bank is monitoring specific areas of weakness, including companies exposed to lower-income consumers and businesses vulnerable to AI-driven disruption. However, Petno emphasized that there are no systemic concerns at the moment.
Private equity activity has returned to normal, with financing markets open for strong credits, sponsors, and transactions. Sponsor-backed companies accounted for approximately 25% of U.S. and global IPOs so far this year, and sponsor M&A is up about 6%, exceeding $1 trillion in total activity. Despite this, Petno warned that some investments from the 2019-2021 vintage could face pressure due to significant leverage acquired at lower interest rates and high multiples.
JPMorgan remains cautious on the private credit asset class, particularly regarding weaker players during a downturn, though it noted the sector is in a "decent place" compared to earlier in the year. The bank is selective regarding AI financing, maintaining underwriting discipline and exposure limits for frontier-model companies and hyperscalers. Regarding blockchain, Petno said institutional demand for stablecoins remains limited, though the bank's Kinexys platform has processed over $4 trillion since inception and handles about $5 billion daily.
Organic growth remains a priority for the Commercial & Investment Bank, with the bank targeting a 16% through-the-cycle return on equity while investing in growth, technology, and cybersecurity. JPMorgan ended last year with $1.2 trillion in CIB deposits, up 14% year over year, and deposits were up 10% at midyear. The bank maintains a high bar for acquisitions but remains prepared to pursue deals opportunistically when valuations and market conditions are favorable.
