J.P. Morgan’s US sales up by 80%, tops German rankings

J.P. Morgan has reported net income of US$11.9 billion for the second quarter of 2021 – up US$7.3 billion year-on-year (YoY). Net revenue of US$31.4 billion was down seven percent.

J.P. Morgan was the number three issuer of structured products in the US with a 12.4% share of the market in Q2 2021, behind Barclays (15%) and Goldman Sachs (14%), but ahead of Citi (12.2%) and Morgan Stanley (10.9%), according to SRP data.

The bank sold 1,167 structured products worth US$3.1 billion between April 1 and June 30, an increase of 82% by sales volume from the prior year period (Q2 2020: US$1.7 billion from 1,013 products). Its offering including just 13 certificates of deposit (US$13m) – a 95% decrease by issuance (and 97% by volume) compared to the 237 CDs (US$400m) that were issued in Q2 last year.

The bank’s best-selling US product in the quarter was a Capped Enhanced Participation Equity Note on the Eurostoxx 50. It was distributed via Goldman Sachs Private Banking and sold US$77m.

Other distributors that sold J.P. Morgan’s products in Q2 included First Trust Portfolios, Incapital, Morgan Stanley Wealth Management, Raymond James and UBS.

More than US$950m was accumulated from 298 products linked to a single stock, of which the share of ViacomCBS (18 products) was the most frequently used, followed by those of Apple and Amazon (12 each). Some 216 products (US$675m) were tied to a single index, including, among others, S&P 500 (103 products), Russell 2000 (30), MSCI Emerging Markets (16), and the proprietary J.P. Morgan Kronos+ Index (11).

Outside the US, the bank showed little to no activity on the primary market, with the exception of one structured deposit that was distributed via XP Investimentos in Brazil.

However, it was the number one issuer of listed products in Germany by issuance, beating off stiff competition from Société Générale, Citi, and Goldman. The bank issued 98,534 turbo certificates in Q2 2021 – an increase of 67% from the same quarter last year (Q2 2020: 58,971 products).

Its turbos, the vast majority of which were open-ended, were predominately linked to single indices (58,490) and single shares (28,991), while commodities (5,889) and FX rates (5,164) were also in demand.

In total, 221 different underlyings were used, of which the Dax was by far the most popular (32,659 products), followed, at some distance, by Dax/Xdax (8,498) and DJ Industrial Average Index (8,026). Gold was the preferred commodity for the German investor (4,079), who also enjoyed a punt on the EUR/USD currency pair (3,939), while Amazon was the highest-ranking share (1,316).

Net income for the corporate and investment bank (CIB) was US$5 billion, down nine percent, with revenue of US$13.2 billion, down 19% YoY.

Markets revenue was US$6.8 billion, a 30% decrease YoY, while fixed income markets revenue was US$4.1 billion, down 44%, driven by lower revenue across products as compared with a favourable performance in the prior year.

Equity markets revenue, at US$2.7 billion, was up 13%, driven by strong performance across products, while credit adjustments & other was a gain of US$233m largely driven by valuation adjustments in the current year with the prior year gain of US$510m driven by funding spread tightening on derivatives.

In asset and wealth management, AUM of US$3 trillion grew 21% driven by higher asset values and strong net inflows, and loans were up 21% primarily driven by securities-based lending.

Click the link to read the full J.P. Morgan Q2 2021 results, presentation and financial supplement.