Dow at 10,000 on JP Morgan
JP MORGAN Chase sparked exuberance on Wall Street yesterday, as it surprised analysts by reporting third-quarter profit of $3.6bn (£2.25bn), driven by a barnstorming three months for its investment bank.
The Dow Jones enjoyed a 1.47 per cent bump, closing at 10,015.86 on the back of the bank’s success and the expectation that rival Goldman Sachs will report strong figures today.
Investment banking was the engine room of JP Morgan Chase’s results, as the division saw profits rise more than twofold to $1.9bn, due largely to a stellar performance in underwriting and in fixed income.
Equity underwriting fees soared by 31 per cent to $681m, while debt underwriting fees rose 19 per cent to reach $593m and revenues from fixed income trading reached $5bn, compared to just $815m in the third quarter of 2008.
The group’s investment bankers are now on course to receive an average of $353,834 as a reward for their success in the first nine months of the year, from a bonus pool for the year to date of $8.79bn.
The scale of proposed payouts at investment banks is likely to arouse public ire once again, but Wall Street rival Goldman Sachs is understood to be preparing to donate $1bn from its bonus pool to charity. The bank, which is expected to report third-quarter profit of $2.34bn today, is predicted to dole out average pay and bonuses of more than $700,000 from a compensation pot forecast to reach a record $22bn.
Wall Street’s good mood was fuelled by the release of minutes from the Federal Reserve, which revealed that most of its members believed that economic recovery was already underway. However, the minutes revealed some disagreement over whether to expand the central bank’s $1.25 trillion mortgage-backed securities purchase scheme.
FAST FACTS JPMORGAN
&9679; JP Morgan retained its position this year as the top global debt and equity underwriter in the first nine months of 2009, working on 1,305 deals worth $498bn.
&9679; The investment bank increased its share of underwriting from 9.3 per cent in the first nine months of 2008 to 10 per cent in 2009.
&9679; In terms of fees, JPMorgan rose from third place globally last year to reach top spot, bringing in $1.6bn in the first nine months and increasing market share of fee income from 10.7 per cent to 13.1 per cent.
&9679; Group-wide, the bank’s 220,861 staff are forecast to net $131,304 each from a bonus pool of around $29bn.