Corporate & Investment Bank
2022 was a watershed year for financial markets.
Tasked with taming inflation and cooling an overheating economy, the Federal Reserve raised interest rates seven times in 2022 to levels not seen in nearly 15 years.
The end of near-zero interest rates meant that many young, emerging companies needed to focus on profitability rather than revenue growth at any cost. Higher rates also dented investors' confidence and tested their patience in assets such as special purpose acquisition companies and cryptocurrencies, which benefited so much from excess capital just a year ago.
Geopolitics dominated headlines and moved markets. In February, Russia invaded Ukraine, fomenting a humanitarian crisis that worsens even now. The war disrupted supply chains and forced countries to rethink their entire approach to sourcing energy, food and other critical resources, with every issue now being viewed through the lens of national security.
Benefits of business diversity
In recent shareholder letters, I’ve stressed the key pillars of a strategy we set years ago: to be global, diversified, complete and at scale. That strategy has served us well and continues to serve us well across the Corporate & Investment Bank (CIB) and our wholesale businesses. We and our clients benefit from our strong, balanced business during volatile times and market dislocations, including those we have witnessed in the last few months.
The CIB generated $15 billion in net income on revenue of $48 billion in 2022, a solid performance following record net income and revenue in 2021.
Industry-wide investment banking fees fell 42% from the prior yearfootnote1, and J.P. Morgan’s fees followed suit, down 48% from 2021. This was not unexpected. Industry-wide investment banking fees have averaged about $80 billion per year from 2015 to 2020footnote1 so 2022 was a lighter-than-average year, more comparable with the pre-pandemic years of 2018 and 2019. Even so, we finished the year #1 in investment banking fees, #1 in equity capital markets, #1 in debt capital markets and #2 in mergers and acquisitionsfootnote1.
In 2022, our M&A franchise advised on over 350 deals that totaled more than $900 billion, including some of the year’s biggest deals, notably in the healthcare industry for Johnson & Johnson and Pfizer.
With declining M&A activity and higher rates slowing refinancings, our debt underwriting fees declined 43% year-over-year in 2022. More positively, we’re proud of the discipline we kept in underwriting, particularly in our leveraged finance business. This puts us in prime position to help companies when activity picks up.
Equity capital markets also saw a dramatic drop-off in deal activity during the year. Volatile and uncertain markets nearly shut down the IPO market, although J.P. Morgan did help lead two of the year’s most notable deals: AIG’s $1.7 billion IPO of Corebridge, its retirement solutions and life insurance business, and Volkswagen's €9.4 billion IPO of Porsche.
Meanwhile, we have continued to scale up our regional investment banking capabilities across the United States. Working with the Commercial Bank, we are deepening relationships with middle-market sponsors and aligning coverage teams to support growth industries, particularly technology, healthcare and the green economy.
Our Markets business continues to be the top-ranked franchise in the world by revenue2. The business outperformed even our own expectations in 2022, generating revenue of $29 billion, just short of 2020’s record highs, as volatility persisted.
Interest rate hikes and geopolitical tensions had investors repositioning portfolios, driving Fixed Income revenue higher, particularly in our Currencies & Emerging Markets and Rates trading businesses. Overall, we reported $18.6 billion in Fixed Income revenue, up 10% from the previous year, and retained our top wallet sharefootnote2. Equities revenue came in at $10.4 billion. Underscoring the strides we’ve made in Equities, the business has grown revenue by more than 80% since 2017, and market share has increased by almost 300 basis points over the same periodfootnote2. Another notable success in 2022 was our Global Research team’s top ranking across all three of Institutional Investor’s annual global surveys.
Scale is essential to run a successful and profitable Markets business, and the capital required to fuel our global trading desks has risen significantly over the last five years. While this increase has been a headwind, our business has been disciplined in deploying capital and continues to deliver strong returns. With the strategic initiatives we have in place, we’re confident in our strategy as market structure evolves.
Our Securities Services business, which provides essential post-trade services to our institutional asset-manager and asset-owner clients, also had a strong year, reporting record revenue of $4.5 billion. Investment over the years has allowed us to steadily grow revenue and market share in Securities Services2 while maintaining a top-tier operating margin. The scale of our business is remarkable. We provide safekeeping, settlement and services for securities in approximately 100 markets around the world, and at the end of 2022, assets under custodyfootnote3 exceeded $28 trillion.
Turning to Payments, the business saw strong growth in 2022, generating firmwide revenue of nearly $14 billion, $4 billion more than in 2021, due in large part to the effect of higher rates. Payments revenue generated from the CIB alone increased 33% from the previous yearfootnote4 .
Global Investment Banking wallet evolution and J.P. Morgan rankings
Serving more than 30,000 clients across the CIB and Commercial Banking and approximately 300,000 small- and medium-sized enterprises in the United States and Canada, the business continued to win new mandates and deepen relationships with the world’s largest and most sophisticated companies. Over the last five years, the CIB's new mandates revenue more than doubled for both corporate and financial institution clients.
Innovation, talent and investment
I am very proud of our people, our results and the vital role our business plays in supporting global economies and commerce and in maintaining liquid, orderly markets. That role is amplified by the close collaboration across our businesses, which has allowed us to grow and invest while still maintaining strong returns for our shareholders. Innovation and investment are critical as we work to meet clients’ evolving needs, as the competition intensifies and as we look to capitalize on several exciting opportunities.
Capital for the climate
Climate change is one of the most pressing challenges of our age. With the introduction of the Inflation Reduction Act and the need for solutions to Europe’s energy challenges, a major opportunity exists in committing capital and expertise to help clients transition to the low-carbon economy. In 2022, the CIB facilitated $164 billion in transactions (toward the firmwide target of $2.5 trillion by the end of 2030) to further sustainable development, including $1 trillion to support green initiatives. This predominantly consisted of leading or participating in environmental, social and governance (ESG)-related bond issuances, providing derivative hedging and advising on M&A deals.
Moving forward, we plan to deepen our coverage of clients engaged in the green economy and low-carbon transition, create new products and allocate capital to finance ESG objectives. We will also build on the success of our two centers of excellence: the Center for Carbon Transition and ESG Solutions, a specialist team of investment bankers who provide ESG-related advice and transaction support.
Markets market share for fixed income and equities
Boom in private capital markets
Another opportunity is the rapid growth in private capital markets. In 2022, we were involved in nearly 60 deals, raising $12 billion in proceeds. We also launched our Capital Connect platform, which reinvented the traditional private capital raise, seamlessly connecting investors with earlier-stage companies. Helping a client at an early stage can result in a client-for-life relationship, leading to opportunities in global corporate and private banking and potentially an IPO or sell-side M&A mandate.
Private debt markets have also grown significantly in the last five years and at a much faster pace than the syndicated lending marketfootnote5 . To compete, we have set up a new direct lending initiative that has already funded dozens of deals, helping to deepen relationships, especially with middle market clients.
The halo effect in trading
In trading, we believe that being complete continues to offer huge advantages. Providing a complete set of trading products creates a halo effect, making it more attractive for clients to trade with us across the full range of our products. Our diversification also provides balance to our revenue regardless of the macroeconomic environment. For example, in 2021, equities outperformed while in 2022, fixed income macro businesses were the main growth engines.
We are also committed to providing a seamless and differentiated experience across the trade life cycle – from pre-trade through to execution to post-trade. For pre-trade, we are the clear leader in research, offering analysis on more than 5,200 companies and around 80 economies worldwide. With so much content, our focus has been on improving the client experience, ensuring we’re delivering relevant, timely reports in the most accessible and digestible formats. For post-trade, our Securities Services business offers comprehensive middle- and back-office services to complete the full trade life cycle experience for our clients.
Finally, we want to capitalize on secular growth trends in the industry. For instance, over the last five years, the industry wallet with large institutional clients has grown more than with other financial institutions. Increasingly, these large clients need banks with size, scale and solutions to manage complex portfolios. Being a reliable, complete counterparty, our market share with this particular group of clients has grown more than 350 basis points over the past five yearsfootnote6.
All of our clients continue to embrace electronic trading. Through the years, we've invested heavily in our electronic trading capabilities, both in areas that have been at the forefront of electronification, such as equities and foreign exchange, and in those where the industry has been slower to embrace the trend, such as credit.
Growth opportunities in data services
In Securities Services, the rising complexity of funds is creating opportunities as we continue to evolve to meet the changing needs of our clients. As a result, we have been modernizing our core custody and fund accounting infrastructure to create scale and efficiency.
We are also investing to expand our capabilities in areas like exchange-traded fund (ETF) servicing, middle-office outsourcing and alternatives – all of which are growth areas for our business.
Looking ahead, clients will increasingly turn to service providers for help in managing their data. Anticipating this development, we launched our Fusion platform in 2022, and we’re already building strong brand recognition in the market. Providing seamless and efficient solutions for discovering, managing and analyzing data will unlock new opportunities to deliver value to our investor clients.
Firmwide Payments and Securities Services revenue
Software solutions for healthcare and connected cars
Our Payments business also operates at tremendous scale and lightning speed, moving more than $9 trillion each day across 160 countries and 120 currencies.
We are investing to further scale and modernize our core payments infrastructure, as well as to develop the networks of the future. From peer-to-peer blockchain connections to JPM Coin, programmable money and digitization of assets, we’re seeking to make sending, managing and receiving money easier, faster and more secure.
Connections with other parts of our firm, including Investment Banking, Commercial Banking, Markets and Retail Banking, are opening opportunities for Payments, especially with the 5.8 million small businesses that already bank with Chase. As the only bank with end-to-end in-house acquiring and treasury capabilities, we have created an ecosystem that provides merchants with everything from smart terminals and tap-on-phone solutions to consumer trends and insights drawn from issuing and acquiring data.
Another big opportunity exists in developing data and software-as-a-service solutions for platform businesses and industry verticals such as healthcare and connected cars. For example, in U.S. healthcare, InstaMed, which we acquired in 2019, digitizes interactions between patient, payers and providers, seamlessly processing payments and moving healthcare data. Now connected to approximately 60% of U.S. healthcare providers, it has created an extensive network for our clients. Similar opportunities exist in the fast-changing mobility industry, impacting not only the automotive sector but energy, utilities and commerce. Through our partnership with Volkswagen Financial Services and majority stake in Volkswagen Pay, we are exploring a future in which cars will be used as smart payment devices and commerce platforms.
In this and many other areas, our accelerated investments over the past few years are helping to future-proof our business. As we compete with banks and fintechs, we have the best of both: scale, end-to-end capabilities and direct relationships with clients of all sizes.
Well-positioned for the future
Global markets have already encountered significant challenges in the new year – from interest rate volatility to market and geopolitical uncertainty. And with central banks tightening in ways we haven’t seen before as they wrestle with ongoing inflationary pressures, market uncertainty is likely to persist and weigh on growth in the United States and other developed economies in 2023.
More positively, we are well-positioned to help clients in any environment. Our scale, completeness and culture of collaboration are key differentiators as clients increasingly look to us for solutions that straddle different business lines.
I am incredibly proud of how our employees supported clients in 2022. Our performance and the opportunities ahead show what an amazing hand our business has – and give me immense confidence and hope for the future.
Daniel E. Pinto
President and Chief Operating Officer, JPMorgan Chase & Co., and CEO, Corporate & Investment Bank
- Return to footnote reference 1
- Dealogic as of January 2, 2023.
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- Coalition Greenwich Competitor Analytics (preliminary for FY22). Market share is based on JPMorgan Chase’s internal business structure and revenue. Ranks are based on Coalition Index Banks for Markets. Securities Services market share is based on cumulative growth from FY17 to FY22.
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- Represents assets held directly or indirectly on behalf of clients under safekeeping, custody and servicing arrangements.
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- Firmwide Payments and CIB Payments revenue metrics exclude the net impact of equity investments.
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- Private debt market measured by private debt assets under management. Syndicated lending market measured by leveraged loans outstanding.
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- Coalition Greenwich Institutional Client Analytics. “Large Institutional Clients” is a JPM-only categorization that is defined by share of wallet, product, penetration and revenue metrics.