Executive Summary
JPMorgan Chase projects that its investment banking revenue will increase by a low-single-digit percentage in the fourth quarter of 2025, with markets revenue rising in the low-teens, citing improved dealmaking conditions and higher trading activity. However, the bank also expects expenses in 2026 to surge to about $105 billion—well above Wall Street’s forecasts. These projections triggered a nearly 5% drop in its share price.
Analysis
JPMorgan’s latest guidance reflects a modest rebound in its investment banking division for Q4 2025, with expectations of low-single-digit growth [1]. While that is positive, it is tempered by much more aggressive forecasts for markets revenue, which the firm expects to rise in the low-teens as trading activity strengthens [1]. The reference to a more constructive environment for M&A suggests deal flow may be improving after a period of stagnation [1].
However, these revenue gains must be weighed against a significantly higher cost profile. For 2026, expenses are forecasted at approximately $105 billion—about 9% above 2025 and notably above analyst expectations of near $101 billion [1, 3]. Key cost drivers include strategic investments (notably in AI), growth and volume-related costs, higher performance and advisory compensation, marketing, credit card business expansion, and branch growth, as well as inflationary pressures across operations [3].
The market reaction—nearly a 5% share drop—signals investor sensitivity to expense risk even when revenue prospects are improving [2]. JPMorgan’s projections likely assume that macro risks—consumer fragility, broader economic slowdown—remain manageable, but could tilt pessimistic if input costs rise further or demand weakens.
Strategic implications:
• JPMorgan must balance revenue momentum in markets and investment banking against tight margin pressure due to costs.
• Investments in AI and branch expansion may yield longer-term growth, but risk short-term stress on profitability.
• Low-single-digit investment banking fee growth may underperform peers such as Citigroup, which expects mid-20s percentage growth in fees for Q4 [4].
Open questions remain regarding whether the expected revenue growth is enough to offset rising costs, how JPMorgan will manage risks around credit losses especially in cards, and how macroeconomic risks—consumer debt, inflation, regulatory pressures—could impact both revenue and cost outlooks.
Supporting Evidence
- JPMorgan expects investment banking revenue to rise “by the low-single digit percentages” in Q4 2025, and markets revenue to be up “low-teens percentages.” [1]
- The bank forecasts firmwide expenses of approximately $105 billion in 2026, driven by strategic investment, growth and volume-related costs, and inflationary pressures. [3]
- Executives note a more constructive environment for M&A activity than in recent periods, indicating dealflow improvement. [1]
- Stock market reacted negatively, with JPMorgan shares falling ~4.3%–4.7% following the higher expense guidance. [2,3]
- JPMorgan anticipates cost increases across business units, including AI, branch expansion, competitive compensation, and marketing. [3]
- The firm also expects credit card charge-off rates to rise in 2026, to about 3.6–3.9%, up from prior projections. [2]
Sources
- [1] www.reuters.com (Reuters) — 2025-12-09
- [2] finance.yahoo.com (Yahoo Finance) — 2025-12-09
- [3] www.ft.com (Financial Times) — 2025-12-09
- [4] www.reuters.com (Reuters) — 2025-12-09