Wall Street banks see deals slow on market jitters but pipeline is strong
JPM•JPMorgan, Citigroup, Goldman Sachs and Wells Fargo executives said investment banking activity softened in the third quarter, particularly in September, as market volatility weighed on deals. They said the overall deal pipeline remained strong, while JPMorgan’s markets revenue rose 15% year over year and equity markets revenue climbed 49%.
1. Deal activity slows
Executives at JPMorgan, Citigroup, Goldman Sachs and Wells Fargo said dealmaking and trading activity softened in the third quarter, particularly late in September, as volatile equity and bond markets weighed on business. JPMorgan cited market volatility and an uncertain economic outlook, while Citigroup and Wells Fargo also pointed to slower investment banking activity.
2. Pipeline remains strong
Despite the slowdown, executives said third-quarter dealmaking was solid overall and the pipeline remained strong. JPMorgan CFO Jeremy Barnum said deals had generally been delayed rather than canceled, and Goldman CEO David Solomon said the IPO market remained in good shape.
3. Equity trading gains
JPMorgan said its markets division revenue rose 15% from a year earlier, including a 49% surge in equity markets revenue. Goldman beat third-quarter profit estimates as equities revenue benefited from volatile markets, while revenue in its fixed income, currency and commodities business fell 1%. JPMorgan and Wells Fargo executives said they saw little deterioration in credit quality.
