While the threat of profit- sapping financial reform looms on the horizon for the major investment banks, one of their number, JPMorgan Chase, showed that for now at least the good times are continuing to roll.
The bank's fixed income trading division, which includes the credit derivatives business under threat on Capitol Hill, posted record results in the first three months of this year. And investment banking as a whole contributed 74 per cent of JPMorgan's $3.33bn profit for the quarter, a profit which came in above analysts' forecasts and sent the company's shares up more than 3 per cent in midday trading.
Jamie Dimon, the JPMorgan chief executive, who is an increasingly vocal critic of the Obama administration's clampdown on Wall Street, warned that extra regulation could hit revenues to the tune of $2bn. "The devil's in the details here," he said, referring to plans to force derivatives trades to go through an exchange. "That could or couldn't [have a big impact on revenues], depending on how it's designed, and how much room is left to have exceptions to over the counter or end-user exceptions. That's not defined yet. So it'll be a negative, and it could be several hundred million dollars to a couple of billion dollars."
Mr Dimon also reiterated his opposition to what he called a "punitive bank tax", the levy on the biggest Wall Street banks which has been designed to recoup taxpayer losses on the bailout.
JPMorgan's first-quarter profits were up 55 per cent on the same period in 2009, despite a $2.3bn addition to the money the bank sets aside to cover legal settlements and defending lawsuits.
Mr Dimon refused to give details about the addition, which comes as banks across the US face investigations and legal actions over their activities in the run-up to the financial crisis, including during the period of the mortgage-funded housing bubble.Reuse content