JPMorgan Chase & Co. (NYSE:JPM) expects investment banking fees and markets revenue to rise in the mid-to-high teens percentage in the third quarter, according to co-President Doug Petno, contrasting sharply with Bank of America’s expectation for a roughly 10% decline in investment banking fees. Petno said JPMorgan entered the quarter with a strong pipeline and is seeing broad-based strength, particularly in M&A, as management and boards show greater confidence in pursuing transactions.
The outlook builds on an already strong second quarter. JPMorgan’s investment banking fees increased 30% year over year, while markets revenue rose 35%. Equity trading was particularly strong, climbing 86%, while fixed-income trading increased 6%. JPMorgan was also involved in major transactions including NextEra Energy’s $67 billion merger with Dominion Energy and Alphabet’s $85 billion equity offering.
JPMorgan’s Investment Banking Pipeline Signals Continued Fee Growth
The strongest positive for JPMorgan Chase & Co. is that the third-quarter outlook suggests its capital-markets momentum is continuing rather than merely reflecting a one-quarter spike. A mid-to-high-teens increase in both investment banking fees and markets revenue would extend the rapid growth already achieved in Q2 and provide a significant contribution to revenue without relying on traditional lending growth. The bank’s scale and position in large transactions also matter: Reuters reported that JPMorgan remained the global investment-banking revenue leader, while its fees rose 28% in Q1.
The broader deal environment also provides support. Global M&A announcements had surpassed $3 trillion during 2026 by July, while JPMorgan said its pipeline remained robust. Its May restructuring of investment-banking leadership, including new global heads for investment banking and M&A, could further align its coverage model with sectors experiencing elevated deal activity.
Trading provides another earnings lever. Q2’s 35% markets-revenue growth, including an 86% jump in equities, demonstrates JPMorgan Chase & Co.’s ability to monetize elevated client activity and market volatility. If those conditions persist, the combination of deal fees and trading revenue could support strong operating revenue even if other parts of the bank face pressure.
JPMorgan’s Strong Trading and Banking Gains Face Market-Cycle Risks
The principal risk is that the strength JPMorgan Chase & Co. is forecasting is highly dependent on market activity remaining elevated. Jamie Dimon previously acknowledged that the bank was benefiting from “very high prices and very high volumes” but said it did not know how long those conditions would continue. A reversal in equity markets, reduced volatility or weaker corporate confidence could therefore affect both underwriting and trading revenue relatively quickly.
There is also evidence that the investment-banking recovery is uneven. Bank of America expects Q3 investment-banking revenue of $1.6 billion-$1.8 billion, down from $2 billion a year earlier, and flat sales and trading revenue. Its CEO also warned that higher interest rates could slow financing demand. Meanwhile, Treasury yields have risen sharply, and oil prices above $100 have renewed inflation concerns, creating a less predictable backdrop for capital markets.
Finally, stronger revenue does not automatically translate into equivalent earnings growth. JPMorgan Chase & Co. raised its 2026 expense forecast to $107.5 billion from $105 billion in July, partly because higher revenue generates higher compensation and other variable costs. Continued investment and compensation expenses could therefore absorb part of the benefit from stronger investment banking and trading activity.
Conclusion
JPMorgan Chase & Co.’s Q3 outlook indicates that its investment-banking and trading franchises are continuing to outperform the broader industry backdrop. The combination of a strong M&A pipeline, large transaction exposure and sustained trading activity could provide another meaningful revenue boost.
However, the gains remain tied to market volumes, deal completion and volatility, while rising rates and higher variable expenses create offsets. The key issue for JPMorgan is therefore whether the unusually strong capital-markets environment can persist long enough for the bank to convert its pipeline into recurring fee and trading revenue.
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This article is originally published at Insider Monkey.
