Can JPMorgan's IB Division Weather the Near-Term Macro Challenges?

JPMorgan JPM remains a top player in investment banking (IB), ranking #1 in global IB fees. In 2024, the company’s total IB fees soared 37% to $8.91 billion after declining in 2023 and 2022. 

Despite tariff-related ambiguity and extreme market volatility, momentum persisted in the first quarter of 2025. In the quarter, IB fees grew 12% year over year to $2.18 billion, fueled by strong advisory and debt underwriting activity.

The near-term IB prospects are cloudy due to market turmoil and ambiguity over monetary policy. Jeremy Barnum, JPM’s chief financial officer, during the first-quarter earnings conference call, said, “In light of market conditions, we are adopting a cautious stance on the investment banking outlook. While client engagement and dialogue is quite elevated, both the conversion of the existing pipeline and origination of new activity will require a reduction in the current levels of uncertainty.”

Additionally, during the Investor Day conference in May, Troy Rohrbaugh, co-CEO of the Commercial & Investment Bank (CIB) segment, noted that economic uncertainty is expected to hurt JPM’s IB business in the second quarter, as deal-making activities have largely stalled. IB fees are expected to be down in the mid-teens range on a year-over-year basis. In the second quarter of 2024, IB fees in the CIB segment were $2.46 billion. 

Despite these challenges, JPMorgan’s long-term outlook for the IB business remains strong, driven by a healthy IB pipeline and an active mergers and acquisitions (M&As) market as well as its leadership position in the business. For IB fees, we estimate a CAGR of 2.2% by 2027.

How are JPM’s Peers Coping With Near-Term IB Headwinds?

Not only JPMorgan, other IB firms like Morgan Stanley MS and Goldman Sachs GS are facing similar challenges. 

While Morgan Stanley is diversifying beyond IB to build a more balanced revenue mix, IB remains a key top-line driver. After a steep decline in 2022–2023, IB revenues rebounded 36% in 2024 to $6.71 billion and rose another 8% in the first quarter of 2025. With a stable and diversified M&A pipeline, Morgan Stanley remains cautiously optimistic, positioning itself to benefit once macroeconomic conditions improve.

Goldman continues to dominate the IB business and maintains its long-standing top position in announced and completed M&As. This underscores its enduring strength in the IB business despite broader headwinds in the sector. Like its competitors, JPM and Morgan Stanley, Goldman also witnessed a decline in the IB fees in 2022 and 2023, before it rebounded last year. Despite an 8% year-over-year fall in IB revenues in the first quarter of 2025, its strong deal pipeline and advisory backlog position it well for a rebound as market conditions improve.

JPM’s Price Performance, Valuation and Estimates

JPMorgan shares have risen 10.8% this year. In contrast, Morgan Stanley has gained 4.8% and Goldman jumped 7.2% in the same time frame.

YTD Price Performance
 

From a valuation standpoint, JPM trades at a 12-month trailing price-to-tangible book (P/TB) of 2.81X, slightly below the industry average. 

P/TB Ratio
 

Moreover, the Zacks Consensus Estimate for JPMorgan’s 2025 earnings implies a decline of 7% on a year-over-year basis, while 2026 earnings are expected to grow at a rate of 5.2%. In the past week, earnings estimates for 2025 and 2026 have moved marginally upward.

Earnings Estimates Trend
 

JPM currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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