JPMorgan Chase & Co.
) have fallen nearly 1.5% since the Morgan Stanley Financial
Conference held at New York on Wednesday. There, the company's
Chief Financial Officer (CFO) Marianne Lake stated that in case
trading revenues do not rebound as expected, there could be job
cuts in the Investment Banking division, with compensation levels
going down as well.
Notably, JPMorgan expects second-quarter 2014 market revenues to be
down approximately 20% year over year. This is per the guidance
provided in the quarterly filings with the Securities and Exchange
Commission (SEC) in May 2014. (Read more:
JPMorganto Witness 20% Drop in Q2 Market Revs
The CFO stated that JPMorgan's magnitude will enable it to
withstand the present slump in trading revenues which appears to be
cyclical. However, in case the market lull continues over the
longer term, management will have to seek avenues to aid
bottom-line growth. One of the ways is to cut costs by lowering
compensation expenses through job reductions.
Lake's statement comes amid declaration of job cuts by
) in the same conference on Tuesday. The company's Chief Executive
Officer James Gorman had announced nearly 100 job cuts in the
fixed-income currency and interest rates trading businesses. (Read
Morgan Stanley to Slash Jobs in Trading Biz
Almost all the major global banks are expected to report lower
trading revenues for the current quarter. Apart from JPMorgan,
) anticipates total trading revenues to be down 20% to 25% year
over year, while institutional revenues are expected to decline
following lower trading activity.
The Goldman Sachs Group Inc.
) president Gary Cohn, while blaming the monetary and fiscal
policies at a Sanford Bernstein conference last month, did not
quantify the actual decline in the company's market revenues,.
We expect JPMorgan to remain under continual pressure due to
lackluster consumer and corporate activities, soft trading volumes
and sluggish mortgage banking in the near term. In spite of
noteworthy cost containment efforts, a low interest rate
environment and sluggish loan growth will likely be persistent
drags on top-line growth.
Currently, JPMorgan carries a Zack Rank #4 (Sell).
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